Corporate Governance Introduction Corporate governance refers to the broad range of policies and practices that stockholders, executive

managers, and boards of directors use to (1) manage themselves and (2) fulfill their responsibilities to investors and other stakeholders. Over the past decade, corporate governance has been the subject of increasing stakeholder attention and scrutiny. These concerns have given rise to a powerful shareholder movement. Shareholder activists, composed primarily of large multi-billion-dollar pension funds, religious and socially responsible investment groups, and other institutional investors, are now using a variety of vehicles to influence board behavior, including creating corporate governance standards of excellence and filing shareholder resolutions. These investors are concerned with such topics as board diversity, independence, compensation, and accountability, as well as a broad range of social issues, e.g. employment ethics practices, environmental policies, and community involvement. Definition Definition- Corporate Governance is the system by which companies are directed and controlled A Canadian Definition- the process and structure..to direct and manage the business and affairs of the corporation with the objective of enhancing shareholder value, which includes ensuring the financial viability of the business OECD Definition- Corporate governance involves a set of relationships between a companys management, its board, its shareholders and other stakeholders ..also the structure through which objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.

Corporate governance in relation to ECIL The Company continued to take several measures to enhance the openness and transparency of all its operations, in line with Govt. guidelines. Board of Directors In terms of Sec 617 of the Companies Act, 1956, ECIL is a Government Company. Presently, the entire paid up capital of the Company is held by the President of India, including 3 shares held by his nominees. The Board, as on 31.03.2010 comprises of nine Directors - Chairman & Managing Director, three Whole-time Director and five Non-Executive Directors. The Board meets at regular intervals and is responsible for the proper direction and management of the Company. Objectives of corporate governance The basic objective of Corporate Governance would be "enhancement of the long-term shareholders value while at the same time protecting the interests of other stakeholders." CG a Way of Life rather than a Code Suggestions BODs are most important, so requires continuous monitoring and assessment. Focus on corporate transparency and communication with shareholders. Role of Institutional Investors should be more active as they are most influential group of shareholders Chairman and CEO The roles to be separated Chairman Head of the Board and CEO- Head of the Company Management Non-Executive directors - The board should have majority non-executive directors Top Management Compensation Separating salary and performance bonus BOD should report on the effectiveness of companys systems of internal control The Directors service contracts should not exceed 3 years without approval by the shareholders

Each listed company should establish an audit committee of at least 3 non executive directors