Corporate Governance and Business Values Crystal Research and Consulting Pvt. Ltd. Presentation

Business Values - Case Studies Regulatory Overview Conclusions Corporate Governance - Case Studies Definitions

Definitions: Corp. Governance Corporate Governance may be defined as “A set of systems, processes and principles which ensure that a company is governed in the best interest of all stakeholders.” It ensures Commitment to values and ethical conduct of business; Transparency in business transactions; Statutory and legal compliance; adequate disclosures and Effective decision-making to achieve corporate objectives. In other words, Corporate Governance is about promoting corporate fairness, transparency and accountability. Good Corporate Governance is simply Good Business. Report of SEBI committee (India) on Corporate Governance defines corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.” The definition is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate Governance is viewed as ethics and a moral duty.

Business Values - Case Studies Regulatory Overview Conclusions Corporate Governance - Case Studies Definitions

Satyam Episode 1.Maytas Deal 2.Raju’s Resignation 3.Role of Directors 4.Role of Auditors

Xerox 1.Members of the Board of Directors Code of Conduct (as amended April 15, 2004)The Board of Directors (the "Board") of Xerox Corporation (the "Company") has adopted the following Code of Business Conduct and Ethics (this "Code ") for directors of the Company. This Code is intended to focus the Board and each director on areas of ethical risk, provide guidance to directors to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a culture of honesty and accountability. Each director must comply with the letter and spirit of this Code.No code or policy can anticipate every situation that may arise. Accordingly, this Code is intended to serve as a source of guiding principles for directors. Directors are encouraged to bring questions about particular circumstances that may implicate one or more of the provisions of this Code to the attention of the Chairman of the Audit Committee, who may consult with inside or outside legal counsel as appropriate. 2.Directors who also serve as officers of the Company should read this Code in conjunction with the Company's Code of Conduct for employees.

Business Values - Case Studies Regulatory Overview Conclusions Corporate Governance - Case Studies Definitions

Godrej Case Study

Business Values - Case Studies Regulatory Overview Conclusions Corporate Governance - Case Studies Definitions

Clause 49 In corporate hierarchy two types of managements are envisaged: i) companies managed by Board of Directors; and ii) those by a Managing Director, whole-time director or manager subject to the control and guidance of the Board of Directors. As per Clause 49, for a company with an Executive Chairman at least 50 per cent of the board should comprise independent directors. In the case of a company with a non- executive Chairman, at least one-third of the board should be independent directors. It would be necessary for chief executives and chief financial officers to establish and maintain internal controls and implement remediation and risk mitigation towards deficiencies in internal controls, among others. Clause VI (ii) of Clause 49 requires all companies to submit a quarterly compliance report to SE in the prescribed form. The clause also requires that there be a separate section on corporate governance in the annual report with a detailed compliance report. A company is also required to obtain a certificate either from auditors or practising company secretaries regarding compliance of conditions as stipulated, and annex the same to the director's report. The clause mandates composition of an audit committee; one of the directors is required to be "financially literate". It is mandatory for all listed companies to comply with the clause by December 31, 2005.

Combined Code - Corp. Gov. Schedules Schedule A Provisions on the design of performance related remuneration This goes into more detail about the problem of director pay. Schedule B Guidance on liability of non-executive directors - care, skill and diligence Under s.172 of the Companies Act 2006 the board of directors' duty of competence was codified. Always pre-existing in the common law, directors are liable on ordinary principles of negligence for a failure to show a reasonable standard of competence. This statement is designed to strengthen a presumption that non-executive directors will be liable for poor board performance only to the extent of their involvement in the affairs. What Schedule B here is trying to make clear is that the contribution towards negligent default will differ between executives and non-executives. Schedule C Disclosure of corporate governance arrangements This sets out a checklist of which duties must be complied with (or explained) under Listing Rule It makes clear what obligations there are, and that everything should be posted on the company's website. Code compliance?

Business Values - Case Studies Regulatory Overview Conclusions Corporate Governance - Case Studies Definitions

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