Definition

Companies make Corporate Governance policies and elucidate them in their Corporate Governance
Report to maintain ethical practices in organisation, protect interests of shareholders and share
governance information with stakeholders.

Clause 49 of Listing Agreement

In 1999, SEBI setup a committee headed by Sri Kumarmangalam Birla ( SEBI Board member) to
establish guidelines for Indian companies that are listed on Indian Stock Exchanges. With the
recommendations of this committee, Clause 49 of the Listing Agreement. Among others, it specified
setting up of an Audit committee, Shareholders’ Grievance committee & disclosures of fees paid to
non-executive directors as mandatory requirements. It also defined the minimum number of
independent directors required on the board of a company & maximum number of committees that a
director could serve on.

Elements of Good Corporate Governance

Below are the important elements of a code of conduct which regulates corporate governance of an
organisation:

 Rights and equitable treatment of shareholders: Board of Directors should and protect
interests of shareholders by regulating the working of the management
 Interests of other stakeholders: Organizations have obligations to stakeholders - employees,
investors, local communities, suppliers, government & customers
 Role and responsibilities of the board: Board should have relevant skills, independence, size &
diversity to review and challenge management performance
 Integrity and ethical behaviour: Integrity should be a fundamental requirement in day-to-day
working of the Board
 Disclosure and transparency: Organizations should clarify and make publicly known the roles
and responsibilities of board and management

Corporate Governance Report of Britannia Industries Limited

Britannia is an Indian food-products manufacturing company headquartered in Kolkata. It's primarily
involved in sales of biscuits, bread, rusk, cakes and dairy products with a market share of 38%.

The Corporate Governance Report focuses on composition & frequency of meetings of the Board,
Audit Committee, Finance Committee, Strategy & Innovation Steering Committee, Corporate Social
Responsibility (CSR) Committee, Nomination and Remuneration. It also provides information on
number of Independent, Executive & Non-Executive directors in the Board and other committees,
General Body meetings, means of communication with shareholders and other data useful for
shareholders.

Comparison of Corporate Governance Report of Britannia with Nestlé

Nestlé
Governance is defined by "The Nestlé Corporate
Business Principles”, “The Nestlé Management
and Leadership Principles” in addition to “The
Nestlé India Code of Business Conduct"
10 directors including 6 independent & 2 women
directors
Separate Audit & Risk Management Committees
4 meetings held for Stakeholders’ Relationship
Britannia
Governance is defined by "Code of Conduct”,
listed on Company website
14 directors including 9 independent & 1 woman
director
Single committee for Audit & Risk Management
Only 2 meetings held for Stakeholders’
 Committee Relationship Committee
No Finance Committee Separate Finance Committee to approve
investments / divestments of funds of the
Company
No Strategy & Innovation Steering Committee Separate Strategy & Innovation Steering
Committee to review and formulation of business
plans & strategies, Company’s product plan and
technical development activities.
No details given Details of whistle blower policy for protection of
Directors'/ Employees' interests have been
mentioned on company website.

Conclusion

Although Nestlé provides considerable more detail regarding the objectives, roles, responsibilities &
workings of its various Committees and the organisation as a whole, Britannia provides all mandatory
details. Britannia can do a better job of making its Corporate Governance Report more friendly and
informational to stakeholders. Also, it appears that Nestlé committees met more frequently than
Britannia during 2017.

Britannia, however, does a better job than Nestlé when it comes to ingenuity of committees. It has
committees overlooking its Finance & Innovation function which will doubtless result in better profits
and products respectively.

References

http://britannia.co.in/investors/annual-report

https://www.nestle.in/investors/stockandfinancials/annualreports

https://www.nestle.in/investors/policies

https://en.wikipedia.org/wiki/Corporate_governance#Stakeholder_interests

https://en.wikipedia.org/wiki/Clause_49

https://www.sebi.gov.in/legal/circulars/oct-2004/corporate-governance-in-listed-companies-clause-49-
of-the-listing-agreement_13153.html

https://www.gktoday.in/academy/article/key-recommendations-of-kumar-mangalam-birla-committee-
report/