BUSINESS ETHICS Corporate Governance

Corporate Governance TO ATTAIN HIGHEST STANDARD OF PROCEDURES AND PRACTICES FOLLOWED BY THE CORPORATE WORLD SO AS TO HAVE TRANSPARENCY IN ITS FUNCTIONING WITH AN ULTIMATE AIM TO MAXIMISE THE VALUE OF VARIOUS STAKEHOLDERS.

CORPORATE GOVERNANCE WHAT IS CORPORATE GOVERNANCE – PROCESSES AND STRUCTURE BY WHICH BUSINESS AND AFFAIRS OF CORPORATE SECTOR IS DIRECTED AND MANAGED OBJECTIVE OF CORPORATE GOVERNANCE a) TO BUILD UP AN ENVIRONMENT OF TRUST AND CONFIDENCE AMONGST THOSE HAVING COMPETING AND CONFLICTING INTEREST b) TO ENHANCE SHAREHOLDERS’ VALUE AND PROTECT THE INTEREST OF OTHER STAKEHOLDERS BY ENHANCING THE CORPORATE PERFORMANCE AND ACCOUNTABILITY

GLOBAL INITIATIVES TO IMPOSE CORPORATE GOVERNANCE SIR ADRIAN CADBURY COMMITTEE – TO ADDRESS THE ISSUES RELATED TO CORPORATE GOVERNANCE IN UNITED KINGDOM CORPORATE GOVERNANCE REPORT OF SINGAPORE GOVERNMENT SARBANES-OXLEY ACT, 2002 BY THE AMERICAN CONGRESS WHICH CAME INTO EFFECT IN JULY 2002 – TO ADDRESS ALL THE ISSUES ASSOCIATED WITH CORPORATE FAILURES TO ACHIEVE QUALITY GOVERNANCE AND TO RESTORE INVESTORS’ CONFIDENCE

IMPLEMENTATION OF CORPORATE GOVERNANCE IN INDIA SHRI KUMAR MANGALAM COMMITTEE – CONSTITUTED IN MAY 1999 TO PROMOTE AND RAISE THE STANDARD OF CORPORATE GOVERNANCE IN INDIA MANDATORY RECOMMENDATIONS OF BIRLA COMMITTEE: APPLIES TO LISTED COMPANIES WITH PAID UP CAPITAL OF Rs.3 CRORE AND ABOVE COMPOSITION OF BOARD OF DIRECTORS – OPTIMUM COMBINATION OF EXECUTIVE & NON-EXECUTIVE DIRECTORS AUDIT COMMITTEE – WITH 3 INDEPENDENT DIRECTORS WITH ONE HAVING FINANCIAL AND ACCOUNTING KNOWLEDGE.

MANDATORY RECOMMENDATIONS OF BIRLA COMMITTEE REMUNERATION COMMITTEE BOARD PROCEDURES – ATLEAST 4 MEETINGS OF THE BOARD IN A YEAR WITH MAXIMUM GAP OF 4 MONTHS BETWEEN 2 MEETINGS. TO REVIEW OPERATIONAL PLANS, CAPITAL BUDGETS, QUARTERLY RESULTS, MINUTES OF COMMITTEE’S MEETING. DIRECTOR SHALL NOT BE A MEMBER OF MORE THAN 10 COMMITTEE AND SHALL NOT ACT AS CHAIRMAN OF MORE THAN 5 COMMITTEES ACROSS ALL COMPANIES MANAGEMENT DISCUSSION AND ANALYSIS REPORT COVERING INDUSTRY STRUCTURE, OPPORTUNITIES, THREATS, RISKS, OUTLOOK, INTERNAL CONTROL SYSTEM INFORMATION SHARING WITH SHAREHOLDERS

NON-MANDATORY RECOMMENDATIONS OF BIRLA COMMITTEE ROLE OF CHAIRMAN REMUNERATION COMMITTEE OF BOARD SHAREHOLDERS’ RIGHT FOR RECEIVING HALF YEARLY FINANCIAL PERFORMANCE POSTAL BALLOT COVERING CRITICAL MATTERS LIKE ALTERATION IN MEMORANDUM ETC SALE OF WHOLE OR SUBSTANTIAL PART OF THE UNDERTAKING CORPORATE RESTRUCTURING FURTHER ISSUE OF CAPITAL VENTURING INTO NEW BUSINESSES

IMPLEMENTATION OF RECOMMENDATIONS OF BIRLA COMMITTEE BY INTRODUCTION OF CLAUSE 49 IN THE LISTING AGREEMENT WITH STOCK EXCHANGES PROVISIONS OF CLAUSE 49 COMPOSITION OF BOARD - IN CASE OF FULL TIME CHAIRMAN, 50% NON-EXECUTIVE DIRECTORS AND 50% EXECUTIVE DIRECTORS CONSTITUTION OF AUDIT COMMITTEE – WITH 3 INDEPENDENT DIRECTORS WITH CHAIRMAN HAVING SOUND FINANCIAL BACKGROUND. FINANCE DIRECTOR AND INTERNAL AUDIT HEAD TO BE SPECIAL INVITEES AND MINIMUM 3 MEETINGS TO BE CONVENED. RESPONSIBLE FOR REVIEW OF FINANCIAL PERFORMANCE 0N HALF YEARLY/ANNUALLY BASIS; APPOINTMENT/ REMOVAL/REMUNERATION OF AUDITORS; REVIEW OF INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY

CLAUSE 49 REQUIREMENTS REMUNERATION OF DIRECTORS – REMUNERATION OF NON-EXECUTIVE DIRECTORS TO BE DECIDED BY THE BOARD. DETAILS OF REMUNERATION PACKAGE, STOCK OPTIONS, PERFORMANCE INCENTIVES OF DIRECTORS TO BE DISCLOSED BOARD PROCEDURES – ATLEAST 4 MEETINGS IN A YEAR. DIRECTOR NOT TO BE MEMBER OF MORE THAN 10 COMMITTEES AND CHAIRMAN OF MORE THAN 5 COMMITTEES ACROSS ALL COMPANIES MANAGEMENT DISCUSSION & ANALYSIS REPORT – SHOULD INCLUDE: INDUSTRY STRUCTURE & DEVELOPMENTS OPPORTUNITIES & THREATS SEGMENT WISE OR PRODUCT WISE PERFORMANCE

CLAUSE 49 REQUIREMENTS MANAGEMENT DISCUSSION & ANALYSIS REPORT – TO INCLUDE: OUTLOOK RISKS & CONCERNS INTERNAL CONTROL SYSTEMS & ITS ADEQUACY DISCUSSION ON FINANCIAL PERFORMANCE DISCLOSURE BY DIRECTORS ON MATERIAL FINANCIAL AND COMMERCIAL TRANSACTIONS WITH THE COMPANY SHAREHOLDERS INFORMATION - BRIEF RESUME OF NEW/RE-APPOINTED DIRECTORS, QUARTERLY RESULTS TO BE SUBMITTED TO STOCK EXCHANGES AND TO BE PLACED ON WEB-SITE, PRESENTATION TO ANALYSTS

CLAUSE 49 REQUIREMENTS SHAREHOLDERS’/INVESTORS GRIEVANCE COMMITTEE UNDER THE CHAIRMANSHIP OF INDEPENDENT DIRECTOR. MINIMUM 2 MEETINGS IN A YEAR REPORT ON CORPORATE GOVERNANCE AND CERTIFICATE FROM AUDITORS ON COMPLIANCE OF PROVISIONS OF CORPORATE GOVERNANCE AS PER CLAUSE 49 IN THE LISTING AGREEMENT

RECENT DEVELOPMENTS COMMITTEE HEADED BY SHRI NARESH CHANDRA CONSTITUTED IN AUGUST 2002 TO EXAMINE CORPORATE AUDIT, ROLE OF AUDITORS, RELATIONSHIP OF COMPANY & AUDITOR RECOMMENDATION OF NARESH CHANDRA COMMITTEE: RECOMMENDED A LIST OF DISQUALIFICATIONS FOR AUDIT ASSIGNMENTS LIKE DIRECT RELATIONSHIP WITH COMPANY, ANY BUSINESS RELATIONSHIP WITH CLIENT, PERSONAL RELATIONSHIP WITH DIRECTOR AUDIT FIRMS NOT TO PROVIDE SERVICES SUCH AS ACCOUNTING, INTERNAL AUDIT ASSIGNMENTS ETC. TO AUDIT CLIENTS AUDITOR TO DISCLOSE CONTINGENT LIABILITIES & HIGHLIGHT SIGNIFICANT ACCOUNTING POLICIES

RECENT DEVELOPMENTS RECOMMENDATION OF NARESH CHANDRA COMMITTEE: AUDIT COMMITTEE TO BE FIRST POINT OF REFERENCE FOR APPOINTMENT OF AUDITORS\ CEO & CFO OF LISTED COMPANY TO CERTIFY ON FAIRNESS, CORRECTNESS OF ANNUAL AUDITED ACCOUNTS REDEFINITION OF INDEPENDENT DIRECTORS – DOES NOT HAVE ANY MATERIAL, PECUNIARY RELATIONSHIP OR TRANSACTION WITH THE COMPANY COMPOSITION OF BOARD OF DIRECTORS STATUTORY LIMIT ON THE SITTING FEE TO NON-EXECUTIVE DIRECTORS TO BE REVIEWED RECOMMENDATIONS HAVE FORMED PART OF COMPANIES (AMENDMENT) BILL, 2003

RECENT DEVELOPMENTS SEBI CONSTITUTED A COMMITTEE HEADED BY SHRI N. R. NARAYANA MURTHY TO REVIEW EXISTING CODE OF CORPORATE GOVERNANCE RECOMMENDATIONS: STRENGHTENING THE RESPONSIBILITIES OF AUDIT COMMITTEE IMPROVING QUALITY OF FINANCIAL DISCLOSURES UTILISATION OF PROCEEDS FROM IPO TO ASSESS & DISCLOSE BUSINESS RISKS FORMAL CODE OF CONDUCT FOR BOARD WHISTLE BLOWER POLICY TO BE PALCE IN A COMPANY PROVIDING FREEDOM TO APPROACH THE AUDIT COMMITTEE SUBSIDIARIES TO BE REVIEWED BY AUDIT COMMITTEE OF HOLDING COMPANY

CG in Wipro Board Composition 8 Directors including 6 non-executive Independent Directors Independent Director criteria Board Membership criteria BoD take care of selecting & evaluating CEOs, other Directors, Auditors and reviewing & monitoring company plans, actions Mix and Proportion of Independent Directors Selection of new Directors Tenure and Compensation No limitation on other Board services New Director orientation

CG in Wipro Board Meetings Scheduling and place of Meetings Agenda for meetings Advance distribution of materials Attendance at meetings Fees and allowance for the meetings Independent meetings of the Independent Directors Board Committees Audit Committee Compensation & Benefits Committee Nominating and Corporate Governance Committee Shareholders’/Investors’ Grievance and Administrative Committee

CG in ONGC Board Of Directors 16 Directors comprising of 7 EDs including Chairman & MD (with one vacancy) and 9 Non-EDs (3 Part-time Official Directors, 1 Director representing the subsidiary and 5 others) Board Procedure Strategic and business plans & policies Annual operating and capital budgets Investment and exposure limits Compliance with statutory/regulatory and review of major legal and contractual issues Adoption of quarterly/half-yearly & annual provisional and audited financial results Transaction pertaining to capital purchase/disposal assets, major provisions and write-off

CG in OnGC Review of Management Management Responsibilities Performance review and succession planning Board performance review Performance review of CEOs, Directors Management Responsibilities Financial Statements and Disclosures Strategic planning Annual Operating Plans and Budgets Effective Management and Organizational Structure Internals Controls and Procedures Disclosure Controls and Procedures

CG in ONGC Committees Of The Board AUDIT & ETHICS COMMITTEE REMUNERATION COMMITTEE SHAREHOLDERS'/INVESTORS' GRIEVANCE COMMITTEE HUMAN RESOURCE MANAGEMENT COMMITTEE PROJECT APPRAISAL COMMITTEE SHARE TRANSFER COMMITTEE HEALTH, SAFETY & ENVIRONMENT COMMITTEE POLICY & PLANNING COMMITTEE

n MEDIA AND CSR

HOW MEDIA CAN PLAY A ROLE IN CG Can drive politicians to introduce corporate law reforms or enforce corporate laws in the belief that inaction would hurt their future political careers. Media attention could affect reputation through the standard channel that most economic models emphasize. Media attention affects not only managers’ and board members’ reputations in the eyes of shareholders and future employers, but media attention affects their reputation in the eyes of society at large

Standard Framework (e.g. IBM) Environmental policy and management system The Environmental Master Plan of IBM Policies apply across its Suppliers, Contractors and even many of its Partners Compliance to quality standards IBM, first company to get single ISO 14001 Material use and management of wastes IBM re-uses/recycles or chemically treats hazardous wastes Energy use and energy management IBM saved 390 M kwhr of electricity, 2.2 M gallons of Oil and reduced emission of CO2 by 0.22 M Tons