1.0 Corporate Governance Definition Corporate Governance is a system of structures and processes to direct and control companies It specifies the distribution of responsibilities among companies’ stakeholders including shareowners, directors, and managers It articulates the rules and procedures for making decisions on corporate affairs

Corporate Governance Definition (Contd) It provides the structure for defining, implementing, and monitoring a company ‘s / an institution’s or an organisation’s goals and objectives, and ensuring accountability to appropriate stakeholders

Corporate Governance Definition (Contd) Corporate Governance as defined by Sir Adrian Cadbury, UK 1992: “The system by which companies / institutions are directed and controlled”

2.0. Hence Corporate Governance Means Leadership For efficiency For probity (complete honesty) With responsibility Both transparent and accountable 5

3.0. The 4 Pillars Corporate Governance Transparency: Directors should clarify to shareowners and other key stakeholders why every material decision has been made Accountability: Directors should be held accountable for their decisions and actions to shareholders (private or public / govt) and, in certain cases, key stakeholders (management, staff etc), submitting themselves to rigorous scrutiny Fairness: All share owners should receive equal, just and unbiased consideration by the directors and management Responsibility: Directors should carry out their duties with honesty and integrity 6

4.0. Agency And Stewardship 7

5.0. Competing Tensions “If management is about running business, governance is about seeing that it is run properly. All companies need governing as well as managing.” Prof. Bob Tricker,

5.1. Corporate Governance Tensions “An effective system of corporate governance must strive to channel the self-interest of managers, directors and the advisors upon whom they rely into alignment with the corporate, shareholder and public interest.” Ira Millstein Senior Partner, Weil Gotshal & Menges, LLP Senior Associate Dean, Corporate Governance, Yale School of Management Chair Emeritus, the Forum’s Private Sector Advisory Group 9

6.0. Five Key Examples of Good Corporate Governance Practice Board Commitment The board discusses corporate governance issues and has created corporate governance committee The company has a corporate governance champion A corporate governance improvement plan has been created Appropriate resources are committed Policies and procedures have been formalized and distributed to relevant staff A corporate governance code has been developed The company is publicly recognized as a corporate governance leader Good Board Practices Clearly defined roles and authorities Duties and responsibilities of directors understood Board is well structured Appropriate composition and mix of skills Appropriate board procedures Director remuneration in-line with best practice Board self-evaluation and training conducted Transparent Disclosure Financial information disclosed Non-financial information disclosed Financials prepared according to IFRS High-quality annual report published Web-based disclosure Well Defined Shareowner rights Minority shareowner rights are formalized Well-organized general assembly conducted Policy on related-party transactions Policy on extraordinary transactions Clearly defined and explicit dividend policy Control Environment Independent audit committee established Risk-management framework present Internal control procedures Internal audit function Independent external auditor conducts audits Management information systems established Compliance function established 10

6.1. Good (Sound) Corporate Governance Practice Attracts Investors “Sound Corporate Governance practices inspire investor and lender confidence, spur domestic and foreign investment, and improve corporate competitiveness. Key to this are well informed Boards and Directors fully aware of their responsibilities and functions” Philip Armstrong, Head, Global Corporate Governance Forum, Washington

7.0. Board’s Over – Riding Role “The Board’s role is to provide entrepreneurial leadership of the company / organisation within a framework of prudent and effective controls….” United Kingdom Combined Code (2006)

8.0 Board Responsibilities Develop the company’s / institution’s purpose, vision, values Guide strategy Oversee management Monitor corporate governance Ensure that controls are in place Oversee disclosure, communications

9.0 Differences Between Directing And Managing Directing Managing Collective decision-making Duties and responsibilities to shareowners, company Directors report regularly to shareowners Leadership vision, strategy Approve, abide by ethics code Signoff of financial statements, etc. Joint and several liability Individual decision-making Specific to department Report to board Implement vision, strategy Abide by ethics code Preparation of financial statements, etc. Several liabilities

10.0 Chairman, CEO Role Separation Board Chairman Provide overall leadership to the Board Responsible for Board Agenda, Work Plan Work with Chairmen of Board Committees Informal link between Board and CEO/Management Participate in selection, induction of NEDs Counsel individual Directors, Performance Evaluation Relations with Shareowners, Investors, Key Stakeholders

Chairman, CEO Role Separation (cont.) Chief Executive Officer (Managing Director) Work closely with Board / Council Chairman Formulate strategy, business plan, gain board budget approval Responsible for financial, corporate objectives Formulate major corporate policies, supervise management Ensure effective management succession planning Ensure continuous improvement in services, products Relations with investors, major customers, business partners Ensure company’s long-term sustainability

11.0 Director’s Role Decision-maker Challenger Supervisor Reflective Listener Process Manager Knowledge Provider Company Representative Status Provider Innovator Developer

12.0 Directors’ Duties 12.1 Duty to Act Within Powers Act only within their powers as defined by the constitution or approved by shareowners 12.2 Duty of Care Legal obligation imposed on directors requiring that they adhere to a reasonable standard of care while performing any acts that could potentially harm others Directors are normally expected to discharge their duties in: Company’s best interests Compliance with company’s code of conduct

Director’s Duties (cont.) 12.3 Fiduciary Duties Directors must act in a faithful, trustful manner towards or on the company’s behalf, putting their duty before personal interests. Considerations include: Good faith Proper purpose Not to make secret profits Avoiding conflicts of interest Confidentiality

13.0 Directors’ Rights Access to information Reimbursement for expenses incurred Discharge their duties without interference from co-Directors Attend and participate in Board Meetings Notice of Meetings Advice Delegation

14.0 Corporate Governance: Local Examples The “Good” The “Bad” The “Ugly

15.0. Conclusion: Action Ideas I plan to take the following actions upon my return to my company: Obstacles that may prevent me from implementing CG in my Company: Actions to overcome such anticipated problems are: 22

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