When was corporate governance introduced in india

The Act as well as the revised Clause 49 now mandate the formation of such a committee with broader remit to cover issues and concerns of all stakeholders and not just shareholders. The Act now mandates companies with more than one thousand shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year are required to constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a non-executive director and such other members as may be decided by the Board to resolve the grievances of security holders of the company.

Clause 49 included this recommendation as a part of management disclosures. Risk Management was however propounded for the first time by the Narayana Murthy Committee in its report by which it required that the company shall lay down procedures to inform Board members about the risk assessment and minimization procedures.

These procedures shall be periodically reviewed to ensure that executive management controls risk through means of a properly defined framework and overlooked by a Risk Management Committee.

This is incorporated in Clause 49 as a part of internal disclosures to the Board. The Act and Revised Clause 49 specify requirements related to risk management. Audit Committee and the independent directors of the company are entrusted with the responsibility of evaluating the robustness of the risk management systems and policy laid down by the Board. A code of conduct creates a set of rules that become a standard for all those who participate in the group and exists for the express purpose of demonstrating professional behaviour by the members of the organization.

The Naresh Chandra Committee for the first time recommended that companies should have an internal code of conduct. The Report by Narayana Murthy Committee further recommended that a company should have a mechanism whistle blower to report on any unethical or improper practice or violation of code of conduct observed and that Audit Committee would be entrusted with the role of reviewing functioning of the mechanism.

The Board members and all senior management personnel are required to affirm compliance with the code annually and include a declaration to this effect by the CEO in the Annual Report. The recommendation of Narayana Murthy Committee to make Audit Committee responsible for reviewing the functioning of the whistle blower mechanism, where it exists, is incorporated in the Clause The Act and revised Clause 49 mandate establishing Whistleblower mechanism to let employees and directors blow whistles on financial and non-financial wrong doings and also that such mechanism should provide protection to the whistle blower from victimization and provide direct access to the Chairman of the Audit Committee in exceptional cases.

The Nomination and Remuneration Committee is to ensure that the level and composition of remuneration is reasonable and sufficient; the relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and the remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

There are also compulsory disclosures to be made in the section on corporate governance of the annual report - All elements of remuneration package of all the directors i.

The Naresh Chandra Committee for the first time required the signing officers, to declare that they are responsible for establishing and maintaining internal controls which have been designed to ensure that all material information is periodically made known to them; and have evaluated the effectiveness of internal control systems of the company. Also, that they have disclosed to the auditors as well as the Audit Committee deficiencies in the design or operation of internal controls, if any, and what they have done or propose to do to rectify these deficiencies.

Clause 49 requires the CEO and CFO to certify to the board the annual financial statements in the prescribed format and establishing internal control systems and processes in the company. Please enable JavaScript to view the site. Viewing offline content Limited functionality available. My Deloitte. Undo My Deloitte. Governance All you need to know on corporate governance practices in India.

Save for later. Regulation The Companies Act, got assent of the President of India on 29 th August, and it was enacted on 12 th September, repealing the old Companies Act, Board of Directors The Desirable Corporate Governance Code by CII for the first time introduced the concept of independent directors for listed companies and compensation paid to them. Tags: Corporate Governance Sonali Soni. Share Tweet Pin. Related Posts. Corporate Governance.

Real Estate barons Ansal brothers will join these big businessmen in Jail November 8, Stitching Dreams to Prosperity November 8, CBI books 2 Delhi-based companies for bank fraud November 7, Discussion about this post. Popular Stories. Login Sign Up Cart. Sign in. Not registered? Sign up. Publications Pages Publications Pages. Recently viewed 0 Save Search. Users without a subscription are not able to see the full content. Bhattacharyya Abstract The Companies Act hereafter, the act and the revised code of corporate governance issued by the Securities and Exchange Board of India SEBI , incorporated in Clause 49 of the Equity Listing Agreement, have incorporated global best practices in corporate governance.

More The Companies Act hereafter, the act and the revised code of corporate governance issued by the Securities and Exchange Board of India SEBI , incorporated in Clause 49 of the Equity Listing Agreement, have incorporated global best practices in corporate governance. Authors Affiliations are at time of print publication. Your current browser may not support copying via this button. Show Summary Details.

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