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1.1 Back-Ground
Corporate governance has succeeded in attracting a good deal of public
interest because of its apparent importance for the economic health of
corporations and society in general. However, the concept of corporate
governance is poorly defined because it potentially covers a large number of
distinct economic phenomenon. As a result different people have come up with
different definitions that basically reflect their special interest in the field. It is
hard to see that this 'disorder' will be any different in the future so the best way to
define the concept is perhaps to list a few of the different definitions rather than
just mentioning one definition.
Indian Model of Governance
The Indian corporates are governed by the Companys Act of 1956 that follows
more or less the UK model. The pattern of private companies is mostly that of
closely held or dominated by a founder, his family and associates

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Corporate Governance refers to the way a corporation is governed. It is the
technique by which companies are directed and managed. It means carrying the
business as per the stakeholders desires. It is actually conducted by the board of
Directors and the concerned committees for the companys stakeholders benefit.
It is all about balancing individual and societal goals, as well as, economic and
social goals.

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(shareholders, board of directors, and companys management) in shaping

corporations performance and the way it is proceeding towards. The relationship
between the owners and the managers in an organization must be healthy and
there should be no conflict between the two. The owners must see that
individuals actual performance is according to the standard performance. These
dimensions of corporate governance should not be overlooked.



Corporate governance is a field in economics that investigates how to

secure efficient management of corporations by the use of incentive mechanisms,

such as contracts, organizational designs and legislation. This is often limited to
the question of improving financial performance, for example, how the corporate
owners can secure that the corporate managers will deliver a competitive rate of
return, Encycogov's definition. to see how this definition can be illustrated as a
transaction cost based theory of the managerial agency problem.
2Corporate governance deals with the ways in which suppliers of finance
to corporations assure themselves of getting a return on their
investment,The Journal of Finance, Shleifer and Vishny [1997, page
3 Corporate governance is the system by which business corporations are
directed and controlled. The corporate governance structure specifies the

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distribution of rights and responsibilities among different participants in

the corporation, such as, the board, managers, shareholders and other
stakeholders, and spells out the rules and procedures for making decisions
on corporate affairs. By doing this, it also provides the structure through
which the company objectives are set, and the means of attaining those
objectives and monitoring performance", OECD April 1999. OECD's
definition is consistent with the one presented by Cadbury [1992, page

4"Corporate governance - which can be defined narrowly as the

relationship of a company to its shareholders or, more broadly, as its
relationship to society -.", from an article in Financial Times [1997].







transparency and accountability" J. Wolfensohn, president of the Word

bank, as quoted by an article in Financial Times, June 21, 1999.

Benefits of Corporate Governance

1. Good corporate governance ensures corporate success and economic
2. Strong corporate governance maintains investors confidence, as a result
of which, company can raise capital efficiently and effectively.
3. It lowers the capital cost.

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4. There is a positive impact on the share price.

5. It provides proper inducement to the owners as well as managers to
achieve objectives that are in interests of the shareholders and the
6. Good corporate governance also minimizes wastages, corruption, risks and
7. It helps in brand formation and development.
8. It ensures organization in managed in a manner that fits the best interests
of all.

Concept of Corporate Governance

1.1. "Corporations pool capital from a large investor base both in the
domestic and in the international capital markets. In this context, investment is
ultimately an act of faith in the ability of a corporations management. When an
investor invests money in a corporation, he expects the board and the
management to act as trustees and ensure the safety of the capital and also earn a
rate of return that is higher than the cost of capital. In this regard, investors expect
management to act in their best interests at all times and adopt good corporate
governance practices.
1.2. Corporate governance is the acceptance by management of the
inalienable rights of shareholders as the true owners of the corporation and of

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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 and corporate funds in the management of a company.

1.2 Objective Of The Study

To Get A Knowledge
To Increase a Knowledge
The help full to the economy
And also profitable to indian country

1.3 Significant Of the Study

. To increase my Knowledge

. To know the Indian people

. And Indian country political are also kow about company rules
. Thats after economic are know about corporate governace
. And this is very profitable to economic.

1.4 Problem of Study

. This is secundary data

. This very difficult to put right information
. And this information are ready but very difficult to find out
.And this not sutable to studies

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1.5 Research of Desire

The study of secondary data

Book, News Paper, Articles, etc, are referred to get the relevant

Data obtain to various sources observation are made and accordingly

conclusion is derived
This study is base on the information available for the time period etc.

1.6 Chapter Schemes

Chapter No 1.In this chapter full information about CAPITAL

Chapter No 2. Need, Committee

And Importants Of Corporate

Chapter No 3. About Infosys
Chapter No 4. Corporate Governance In Infosys
Chapter No 5. Articales On Corporate Governance In Infosys
Chapter No 6. Oecd Principles On Corporate Governance
Chapter No 7. Recent Policy Steps Taken By Sebi For Ensuring Better

Governance In Listed Companies

Chapter No 8. Conclusion

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2.1 Need For Corporate Governance In India
A corporation is a congregation of various stakeholders, namely customers,
employees, investors, vendor partners, government and society. In this changed
scenario an Indian corporation, as also a corporation elsewhere, should be fair and
transparent to its stakeholders in all its transactions. This has become imperative
in todays globalized business world where corporations need to access global
pools of capital, need to attract and retain the best human capital from various
parts of the world, need to partner with vendors on mega collaborations and need
to live in harmony with the community. Unless a corporation embraces and
demonstrates ethical conduct, it will not be able to succeed. Corporations need to
recognize that their growth requires the cooperation of all the stakeholders; and
such cooperation is enhanced by the corporations adhering to the best Corporate
Governance practices. In this regard, the management needs to act as trustees of
the shareholders at large and prevent asymmetry of benefits between various
sections of shareholders, especially between the owner-managers and the rest of
the shareholders.

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2.2 The Importance Of Corporate Governance

Corporate governance refers to the rules, procedures, and administration of the
firms contracts with itsshareholders, creditors, employees, suppliers, customers,
and sovereign governments. Governance is legally vested in a board of directors
who have a fiduciary duty to serve the interests of the corporation rather than their
own interests or those of the firms management.
With this simple definition, we assume that directors and managers are motivated
to serve the interests of the corporation by incentive pay, by their own
shareholdings and reputational concerns, and by the threat of takeover.
The operation of the board and the remuneration of the Executive Directors are
vital in maintaining and protecting the interests of the different stakeholder
groups. If we accept that the shareholders collectively own the business and they
have invested in it to maximise their wealth, then their main aim is to grow the
overall value of their share capital and maximise returns in the form of dividends.
However, there are potential conflicts of interest between this ambition and the
managers/employees of the group who are looking to maximise their own wealth.

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Managers are appointed as agents on behalf of the shareholders of the company

who have delegated this responsibility to them.
In the UK and the US, corporate governance mechanisms emphasise the
relationship between shareholder and management. In countries such as France,
Germany and the Netherland, the corporate governance mechanisms take a
stakeholders approach to governance, aiming to balance the interests of owners,
managers, major creditors and employees.

The main mechanisms for understanding corporate governance are the following:
1. The market for corporate control (i.e. a hostile takeover market and the market
for partial control).
2. Large shareholder and creditor monitoring.







directors, non-

executivecommittees and the design of executive compensation contracts.

4. External mechanisms, i.e. product-market competition, external auditors and
the regulatory framework of the corporate-law regime and stock exchan How

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governance affects firm performance? Do firms perform better when

shareholders interests are likely to be dominant? Answering these questions, will
lead us to evaluate the folowing points:
*Corporate control Changes in control due to takeover or insolvency bring
dramatic changes in firm personnel and strategy. CEO and board member
turnover increases radically in the event the firm goes into financial distress.
Managers will avoid being taking over by either increasing the firms cash flows
or by some less productive avenue.
*Board, Remuneration Committee, Pay and incentives A research has found that
the appointment of non-executives directors is associated to a company stock
price increases. An Executive that wants to take the company in a direction that
might be more in its personal interests could be sacked. Another research has
found a positive relationship between the percentage of shares owned by
managers and board members and firms market-to-book values.

The remuneration committee is made up of non-execs, so this creates a natural

control to stop the executive directors awarding themselves unjustifiable salaries
and benefits. The remuneration of the Directors should be in line with other
similar companies, to remain competitive and retain its top executives.

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The remuneration packages are intended to align the interests of Director and
Shareholders by linking cash and share incentives to performance.
However, some argue that the increase in share price was also associated with a
decline in the value of the firms outstanding debt. And corporate performance
cannot be reliably increased simply by adding outsiders to the board of directors
or by increasing the CEOs stockholdings.

Parmalat- a world leader in the dairy food business, entered bankruptcy protection
in 2003 when investors least expected it. How the Italian group so much praised
siphoned away billions of euros without its shareholders, nor its top managers
suspecting it?
One of the problem at Parmalat was due to its ownership and control structuresThere was a limited presence of shareholders and mainly linked by family ties.
Parmala was a holding company with all the other companies within the group
controlled by the Tanzani family. The family had the majority if not all of the
voting rights. As this happens, other shareholders had limited control over the
activities of the group-hence limited power to block any decisions. Managers had
also limited power to influence decisions taken by the family shareholders.

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In that case, the family managed to siphoned away almost millions of euros to
other companies owned by the family. In summary, the demise of Parmalat was a
failure to fully implement the corporate governance mechanisms listed above.
*Statutory auditors Some thought that the Parmalat case was country-specific,
however, Enron the giant American Energy failed victim to corporate governance
problems with the help of Arthur Andersen-the US accounting firm.

2.3 Committee on Corporate Governance

There are various committees formed with a view to reforming the Corporate
Governance in India since 1990s. Some of the recommendations of these
committees are highlighted below.
1. Confederation of Indian Industries (CII) set up a task force in 1995 under Rahul
Bajaj, a reputed industrialist. In 1998, the CII released the code called Desirable
Corporate Governance. It looked into various aspects of Corporate Governance
and was first to criticize nominee directors and suggested dilution of government
stake in companies.
2. SEBI had set up a Commission under Kumarmanlagam Birla. This committee
covered issues relating to protection of investor interest, promotion of
transparency, building international tandards in terms of disclosure of

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3. The Department of Companies Affairs (DCA) modified the Companies Act,

1956. It undertakes periodic review and brings about amendments in the
Companies Act, 1956. In 1999, the Act introduced the provision relating to
nomination facilities for shareholders and share buybacks and for formation
of Investor education and protection fund.

4. The Department of Corporate Affairs constituted Naresh Chandra Committee in

2002. The committee talks extensively about the statuary auditor-company
relationship, rotation of statutory audit firms/partners, procedure for appointment
of auditors and determination of audit fees, true and fair statement offinancial
affairs of companies.

5. SEBI appointed Narayan Murthy Committee in 2002. Its report mainly focuses
on and makes mandatory recommendations regarding responsibilities of audit
committee, quality of financial disclosure, requiring
disclose business risks in the +companys annual reports.

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boards to assess and

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3.1 The Infosys Story
In 1981, seven engineers started Infosys Limited with just US$250. From the
beginning, the company was founded on the principle of building and
implementing great ideas that drive progress for clients and enhance lives through
enterprise solutions. For over three decades, we have been a company focused on
bringing to life great ideas and enterprise solutions that drive progress for our
We recognize the importance of nurturing relationships that reflect our culture of
unwavering ethics and mutual respect. It will come as no surprise, then, that 98
percent of our revenue comes from existing clients (as of September 30, 2013).
Infosys has a growing global presence of more than 160,000+ employees
worldwide, 73 offices and 94 development centers in the United States, India,
China, Australia, Japan, Middle East, and Europe.
At Infosys, we believe our responsibilities extend beyond business. That is why
we established the Infosys Foundation to provide assistance to some of the more

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socially and economically depressed sectors of the communities in which we

work. And that is why we behave ethically and honestly in all our interactions
with our clients, our partners and our employees.

3.2 History
Established in 1981, Infosys is a NYSE listed global consulting and IT services
company with more than 158,000 employees. From a capital of US$ 250, we have
grown to become a US$ 8.095 billion (LTM Q3 FY14 revenues) company with a
market capitalization of approximately US$ 33 billion.
In our journey of over 30 years, we have catalyzed some of the major changes that
have led to India's emergence as the global destination for software services
talent. We pioneered the Global Delivery Model and became the first IT company
from India to be listed on NASDAQ. Our employee stock options program
created some of India's first salaried millionaires.
Read more about the defining moments in the history of Infosys.


Sets up new development center In Araraquara, Brazil

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The Infosys Prize, offered by the Infosys Science Foundation completes

five years


Infosys Board appoints N. R. Narayana Murthy as Executive Chairman of

the Board

Infosys begins trading on NYSE Euronext London and Paris markets

Infosys Edge wins the NASSCOM Business Innovation Award for 2013

Infosys presented with 2013 Environmental Tracking Carbon Ranking

Leader award


Listed on the NYSE market

Infosys acquires Lodestone Holding AG, a leading management

consultancy based in Switzerland

Forbes ranks Infosys among the world's most innovative companies

Infosys among top 25 performers in Caring for Climate Initiative

Infosys crosses the US$ 7 billion revenue mark


N. R. Narayana Murthy hands over chairmanship to K.V. Kamath

Infosys crosses US$ 6 billion revenue mark, employee strength grows to

over 130,000

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Infosys crosses the US$ 5 billion revenue mark


Infosys opens its first development center in Brazil and second Latin
American development center in Monterrey, Mexico

Infosys selected as a member of The Global Dow

Employee strength grows to over 100,000


Infosys crosses revenues of US$ $ 4.18 billion

Annual net profits cross US$ 1 billion


Infosys crosses revenues of US$ 3 billion. Employees grow to over 70,000

Kris Gopalakrishnan, COO, takes over as CEO. Nandan M. Nilekani is

appointed Co-Chairman of the Board of Directors

Opens new subsidiary in Latin America

Reports Q2 revenue of over US$ 1billion


Infosys celebrates 25 years. Revenues cross US$ 2 billion. Employees

grow to 50,000+

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N. R. Narayana Murthy retires from the services of the company on

turning 60. The Board of Directors appoints him as an Additional Director.
He continues as Chairman and Chief Mentor of Infosys


Records the largest international equity offering of US$ 1 billion from


Selected to the Global MAKE Hall of Fame


Revenues reach US$ 1 billion

Infosys Consulting Inc. is launched


Establishes subsidiaries in China and Australia

Expands operations in Pune and China, and sets up a development center

in Thiruvananthapuram


Touches revenues of US$ 500 million

Nandan M. Nilekani takes over as CEO from N.R. Narayana Murthy, who
is appointed Chairman and Chief Mentor

Opens offices in the Netherlands, Singapore and Switzerland

Sponsors secondary ADS offering

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Infosys and the Wharton School of the University of Pennsylvania set up

The Wharton Infosys Business Transformation Awards (WIBTA)

Launches Progeon, offering business process outsourcing services


Touches revenues of US$ 400 million. Opens offices in UAE and

Argentina, and a development center in Japan

N. R. Narayana Murthy is rated among Time Magazine/CNN's 25 most

influential businessmen in the world

Infosys is rated as the Best Employer by Business World/Hewitt


Touches revenues of US$ 200 million

Opens offices in France and Hong Kong, a global development center in

Canada and UK, and three development centers in the US

Re-launches Banks 2000, the universal banking solution from Infosys, as



Touches revenues of US$ 100 million. Listed on NASDAQ

Infosys becomes the 21st company in the world to achieve a CMM Level
5 certification

Opens offices in Germany, Sweden, Belgium, Australia, and two

development centers in the US

Infosys Business Consulting Services is launched

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Starts Enterprise Solutions (packaged applications) practice


Opens an office in Toronto, Canada

Infosys is assessed at CMM Level 4


The Infosys Foundation is established


Opens first European office in the UK and global development centers at

Toronto and Mangalore. Sets up e-Business practice


Moves corporate headquarters to Electronic City, Bangalore. Opens a

development center at Fremont


Introduces Employee Stock Options (ESOP) program

Acquires ISO 9001/TickIT certification

Goes public


Opens first international office in Boston, US

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Relocates corporate headquarters to Bangalore


Infosys is established by N. R. Narayana Murthy and six engineers in

Pune, India, with an initial capital of US$ 250

Signs up its first client, Data Basics Corporation, in New York

3.3 Building Tomorrows Enterprise

Opportunities today have become inseparably linked with advances in IT. But we
dont expend effort to merely give our clients whats best for them today; we set
our sights on what that effort can grow into tomorrow and beyond. Fortifying
their business and improving the way we live on this planet. Were about pushing
the limit of what is currently possible. Being audacious with our ideas. And then
executing these ideas to perfection.
Is that ambitious? Of course it is. But weve never let challenges prevent us from
trying. And more often than not, we succeed. For instance, we took engineering
design methodology and tools typically used in manufacturing to create a
model heart. That heart is now a valuable research and teaching aid, which is

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helping save lives bringing down time to diagnosis and treatment. We were
among the first to make large-scale use of light-weight advanced composites
(instead of metal) to design lighter planes for our client. These airplanes that
burn 25% less engine fuel now lead the next generation of commercial aircrafts.
Our cloud-based solution is enabling cars, the world over, to communicate with
each other and with other devices, in readiness for a world navigated by thinking,
talking, and intelligent automobiles.
There are so many ways in which Infosys is working on tomorrow.

How we squeezed a bank into a mobile

We delivered the technology for a telecom provider to launch a mobile
wallet service in India. See cashless payments on the move.

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What it took to teach a car to think

They asked if we could design and develop a scalable platform to bring
online infotainment services to cars. That set us racing.

What made the TV two-way

A telecom operator wanted to monetize products and services through the
television. Heres what we did to make teleshopping a hit.

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How we put an end to shopping queues

Long check-out queues were driving their shoppers away. Heres how we
kept them shopping for more.

How virtual holiday shopping became a reality

A leading hotel operator was determined to change consumer behavior on
social media from simply 'buzz' to 'buy'. We wanted in on this challenge.

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When warnings can make a life-saving difference

In 2009, a bushfire disaster left 173 dead, 414 injured, 2,000 homes
destroyed, and 7,300 people displaced in Australia. We swore to never let
that happen again.


Corporate governance is about maximizing shareholder value legally,
ethically and on a sustainable basis. At Infosys, the goal of corporate governance
is to ensure fairness for every stakeholder our customers, investors, vendorpartners, the community, and the governments of the countries in which we
operate.We believe that sound corporate governance is critical in enhancing and
retaining investor trust.It is a reflection of our culture, our policies, our

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relationship with stakeholders and our commitment to values.Accordingly, we

always seek to ensure that we attain our performance rules with integrity.
Our Board exercises its fiduciary responsibilities in the widest sense of the term.
Our disclosures seek to attain the best practices in international corporate
governance. We also endeavor to enhance long-term shareholder value and
respect minority rights in all our business decisions.
We continue to be a pioneer in benchmarking our corporate governance policies
with the best in the world. Our efforts are widely recognized by investors in India
and abroad. We have been audited for corporate governance by the Investment
Information and Credit Rating Agency ( ICRA) and the Credit Rating Information
Services of India Limited (CRISIL) and have been awarded a rating of CGR 1 and
GVC Level 1 respectively.
We are also in compliance with the recommendations of the Narayana Murthy
Committee on Corporate Governance, constituted by the Securities and Exchange
Board of India (SEBI).

Corporate Governance Philosophy

Our corporate governance philosophy is based on the following principles:

Satisfying the spirit of the law and not just the letter of the law

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Going beyond the law in upholding corporate governance standards.

Maintaining transparency and a high degree of disclosure levels.

Making a clear distinction between personal conveniences and corporate


Communicating externally, in a truthful manner, about how the Company

is run internally

Complying with the laws in all the countries in which the Company

Having a simple and transparent corporate structure driven solely by

business needs

Management is the trustee of the shareholders' capital and not the owner
When in doubt, disclose

Board composition
At the core of our corporate governance practice is the Board, which oversees
how the management serves and protects the long-term interests of all our
stakeholders. The majority of our Board, nine out of 16, are independent
members. As active and well informed of the board, they are fully committed to
ensuring the highest standards of corporate governance. In addition, the

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independent directors make up the audit, compensation, investor grievance,

nominations and the risk management committees, bringing their valuable
perspective to the board.
As a part of our commitment to follow global best practices, we comply with the







recommendations of the Conference Board Commission on Public Trusts and

Private Enterprises in the U.S. We also adhere to the UN Global Compact

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5.1 Corporate Governance How New Rules Will Change
Indian Companies
John Samuel Raja D, ET Bureau Jan 8, 2013, 03.32AM IST
The issue of corporate governance in the private sector is a reality and it's time
they live up tothat," says Sachin Pilot, minister of corporate affairs. The 62-year
old law that governs companies is on the cusp of being replaced by new rules,
which the government says will usher in many good practices.
The big picture shows intent, but it's the small details, which will unravel in the
coming year, that will show the government's seriousness to follow through.
Also, adds Jamil Khatri of KPMG: "The challenge is not to introduce new
provisions, but implementation." As we wait for greater clarity, John Samuel Raja
D breaks down the new legislation to show how things will change for companies
and, by extension, their stakeholders like investors, creditors, auditors and

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5.2Ambit Puts Infy In The Dock Over Governance

The report, titled 'The underbelly of Indian IT - the ugly, the bad
and not so good' hasn't spared other IT companies either
Bibhu Ranjan Mishra & Dev Chatterjee | Bangalore
March 28, 2014 Last Updated at 10:00 IST

A new report has raised serious questions on the corporate governance standards
at Infosys, saying board independence at India's second-largest information
technology (IT) services firm might be the weakest among Tier-I entities.
The report, published by brokerage firm Ambit Capital Research, also says the
promoters hold disproportionately high board representation with respect to their






"While N R Narayana Murthy, S D Shibulal and S Gopalakrishnan together hold

around 10 per cent in the company, they represent 23 per cent of the voting rights
on the board. With the highest promoter representation and the lowest proportion
of independent directors, Infosys' board independence appears to be the weakest
among Tier-I firms," Ankur Rudra and Nitin Jain said in the report.
ALSO READ: 'The ugly, the bad and the not so good' of Indian IT sector
The report, titled 'The underbelly of Indian IT - the ugly, the bad and not so good'
hasn't spared a few other IT companies, either. While it categorised the accounting
and corporate governance standards at Geodesic, Educomp Solutions and

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Financial Technologies (FT) as 'ugly', these at Rolta India and MCX have been
categorised as 'bad'. Tech Mahindra/Satyam, Infosys and KPIT Technologies have






"While some of these companies (such as FT, Educomp and Geodesic) are already
understood by the market for what they are, others (such as Rolta, MCX, Infosys,
Tech Mahindra and KPIT) are yet to be discounted appropriately by

When contacted, Infosys said it did not want to comment on the report. While FT
also declined comment, Tech Mahindra said the company had not seen the report
and so was unable to respond. A senior Educomp official said: "We completely
reject the opinion put out in this report, that too on an accounting practice the
company discontinued a little more than two years ago. We will go through this
report and take necessary action against what seems to be an ill-researched and





A spokesperson for Rolta India said Ambit's was not the correct assessment. "We
have revalued all assets and, in fact, adopted a more conservative policy," he said.
Emails sent to other companies had not elicited any response till the time of going
to press.While talking about Infosys, the report says the company has been

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regarded as a paradigm of corporate governance in India ever since its initial

public offering in 1993. "While this image has earned Infosys goodwill from
investors, clients and employees, there are signs these high corporate governance
standards are fraying. Murthy's entry into Infosys in an executive capacity (even
after the firm's well-articulated policy of executives retiring at the age of 60),
bringing with him his son as an executive assistant, higher promoter
representation at the board and peculiar guidance pattern resulting in high
volatility in share price - none of this gels with Infosys' image of a leader in
corporate governance," it adds.

Infosys co-founder Murthy returned to the company as executive chairman in

June last year, junking his retirement after what he claimed was a crisis call made
to him by the board. This, he said, was done to seek his help in bailing out the
company, which was steadily losing its lustre. However, he joined the company
with a pre-condition to bring his Harvard-educated son, Rohan Murty, his








The Ambit report says the entry of Murthy, as well as his son, amounts to breach
of corporate policies. "Infosys has historically followed a well-articulated policy
of executive retirement at the age of 60,
with Murthy himself being a strong
proponent of the policy. Similarly, all

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the founders have time and again mentioned about not letting a family manage the
business. More surprising was Rohan Murty's entry into Infosys as the senior



Infosys is known for introducing some of the global best corporate governance
practices, including giving quarterly (it has discontinued the practice now) and
annual revenue growth guidance, among other things. The Ambit report, however,
says Infosys has lately been following a peculiar guidance pattern, which is
leading to extreme volatility.

5.3 Infosys is number one for corporate governance

practices: IR Global Rankings
PTI Dec 13, 2012, 05.22PM IST
BANGALORE: Infosys today said it has been awarded the number one spot
globally for its corporate governance practices by IR Global Rankings (IRGR).
IRGR is the most comprehensive technical ranking system for investor relations
websites, corporate governance practices and financial disclosure procedures,
according to the Bangalore-headquartered company.
The 14th annual edition of the IRGR saw participation from more than 280
companies from 45 countries this year

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OECD, in its endeavour to improve the governance practices, had published its
revised principles on Corporate Governance in 2002. The OECD Principles of
Corporate Governance have since become an international benchmark for policy
makers, investors, corporations and other stakeholders worldwide. They have
advanced the corporate governance agenda and provided specific guidance for
legislative and regulatory initiatives in both member and non-member countries.
The Financial Stability Forum has designated the Principles as one of the 12 key
standards for sound financial systems.

Oecd Principles On Corporate Governance Are As

Principle I: Ensuring the Basis for an Effective Corporate
Governance Framework
The corporate governance framework

should promote transparent and efficient markets,

be consistent with the rule of law and

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clearly articulate the division of responsibilities among different


regulatory and enforcement authorities

Principle II: The Rights of Shareholders and Key Ownership

Functions protected and facilitated

protect and facilitate the exercise of shareholders rights

Principle III: The Equitable Treatment of Shareholders

Should ensure the equitable treatment of all shareholders

opportunity to obtain effective redress for violation of their rights

Principle IV: The Role of Stakeholders in Corporate

Governance- recognized

should recognise the rights of stakeholders

encourage co-operation between corporations and stakeholders in creating
wealth, jobs, and the sustainability of enterprises

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Principle V: Disclosure and Transparency

Timely and accurate disclosure is made on all material matters including

the financial situation, performance, ownership, and governance of the

Principle VI: The Responsibilities of the Board-Monitoring

Management and Accountability to Shareholders

should ensure the strategic guidance of the company,

the effective monitoring of management by the board, and
the boards accountability to the company and the shareholders

Principle V: Disclosure and Transparency

Timely and accurate disclosure is made on all material matters including

the financial situation, performance, ownership, and governance of the

Principle VI: The Responsibilities of the Board-Monitoring

Management and Accountability to Shareholders
should ensure the strategic guidance of the company,
the effective monitoring of management by the board, and
the boards accountability to the company and the shareholders

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Indian Corporate Governance Framework is in compliance with the Corporate

Governance principles of OECD.

OECD steering committee on corporate governance reviews the principles and its
compliance by member and non-member countries by conducting regular
thematic peer review of member and non-member countries.

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The introspection that followed the Satyam episode has resulted in some major
changes in Indian corporate governance regime. Some of the recent steps taken in
this regard are as follows:

Disclosure of pledged shares:

It is made mandatory on the part of promoters
(including promoter group) to disclose the details of pledge of shares held by
them in listed entities promoted by them. Further, it was decided to make such
disclosures both event-based and periodic.

Peer review:
In the light of developments with respect to Satyam SEBI
carried out a peer review exercise of the working papers (relating to financial
statements of listed entities) of auditors in respect of the companies constituting
the NSE Nifty 50, the BSE Sensex and some listed companies outside the
Sensex and Nifty chosen on a random basis.

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In order to ensure public dissemination of details of agreements entered into by

corporates with media companies, the listed entities are required to disclose
details of such agreements on their websites and also notify the stock exchang of
the same for public dissemination.

Maintenance of website:
In order to ensure/enhance public
dissemination of all basic information about the listed entity, listed entities are
mandated to maintain a functional website that contains certain basic information
about them, duly updated for all statutory filings, including agreements entered
into with media companies, if any.

Compulsory dematerialization of Promoter holdings:

In order to
improve transparency in the dealings of shares by promoters including pledge /
usage as collateral, it is decided that the securities of companies shall be traded in
the normal segment of the exchange if and only if, the company has achieved

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100% of promoters and promoter groups shareholding in dematerialized form. In

all cases, wherein the companies do not satisfy the above criteria, the trading in
securities of such companies shall take place in trade for trade segment;

Peer reviewed Auditor:

It has been decided that in respect of all listed
entities, limited review/statutory audit reports submitted to the concerned stock
exchanges shall be given only by those auditors who have subjected themselves to
the peer review process of ICAI and who hold a valid certificate issued by the
Peer Review Board of the said Institute;

Approval of appointment of CFO by the Audit

In order to
ensure that the CFO has adequate accounting and financial management expertise
to review and certify the financial statements, it is mandated that the appointment
of the CFO shall be approved by the Audit Committee before finalization of the
same by the management. The Audit Committee, while approving the
appointment, shall assess the qualifications, experience & background etc. of the

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Disclosure of voting results:

In order to ensure wider dissemination of
information regarding voting patterns which gives a better picture of how the
meetings are conducted and how the different categories of investors have voted
on a resolution, listed entities are required to disclose the voting results/ patterns
on their websites and to the exchanges within 48 hours from the conclusion of the
concerned shareholders meeting.

Enabling shareholders to electronically cast their vote:

In order to enable
wider participation of shareholders in important proposals, listed companies are
mandated to enable e-voting facility also to their shareholders, in respect of those
businesses which are transacted through postal ballot by the listed companies.

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Manner of dealing audit reports filed by listed entities:

board has approved a mechanism to process qualified annual audit reports filed by
the listed entities with stock exchanges and Annual Audit Reports where
accounting irregularities have been pointed out by Financial Reporting Review
Board of the Institute of Chartered Accountants of India (ICAI-FRRB). In order to
enhance the
quality of financial reporting done by listed entities, it has been, inter-alia, decided

Since the late 1990s, significant efforts have been made by the Indian
Parliament, as well as by Indian corporations, to overhaul Indian Corporate
Governance. The current Corporate Governance regime in Indian straddles both
voluntary and mandatory requirements like Voluntary Guidelines by Ministry of
Corporate Affairs. And for listed companies, the vast majority of Clause 49 of the
listing agreements requirements is mandatory.

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The voluntary guideline on Corporate Governance by Ministry of Corporate

Governance is a benchmark for the Corporate Governance practices in the Indian
corporations, and hopefully the corporate world will make the best use of it.
Efforts are also being made by the legislature to amend the Companies Act 1956.
As a result, amendments relating to Corporate Governance are expected to be
brought before Parliament in The Companies Bill 2009. India has one of the best
Corporate Governance legal regimes but poor implementation together with
socialistic policies of the pre-reform era has affected corporate governance.

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