PROJECT REPORT ON

CORPORATE GOVERNANCE BY INNER CONSCIOUSNESS SUBMITTED BY- 157TH MSOP BATCH

Group F
Roll No 6 16 26 36 46 Name of the participant Kanika Gupta Jyotsna Arora Lavang Arora Shekhar Chopra Gourav Goel Registration No NR0525614 NR0509924 220520147 220588520 220538372

INTRODUCTION
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The root of the word Governance is from Gubernate which means to steer Corporate Governance would mean to steer an organization in the desired direction. The responsibility to steer lies with the Board of Directors/Governing board. Governance is concerned with the intrinsic nature, purpose, integrity and identify of an organization with primary focus on the entitys relevance, continuity and fiduciary aspects. Contrary to popular misconception about Corporate Governance in modern times the roots of Corporate Governance are not besmirched in negative trail. That is to say Corporate Governance did not have its raison detre in the negative happenings in the corporate world. Looking at Corporate Governance from that perspective is to undermine its creative. Positive, regenerative and prosperous aspects good governance has been an eternal source of inspired thinking and dedicated action. EVIDENCE OF CORPORATE GOVERNANCE FROM THE ARTHASHASTRA Kautilyas Arthashastra maintains that for good governance all administrators including the king were considered servants of the people. Good governance and stability were completely linked. There is stability if leaders are responsive, accountable and removable. These tenets hold good even today. Kautilya elaborates on the fourfold duty of a king as RAKSHA VRIDHI PALANA YOGAKSHEMA

The substitution if the state with the corporation, the king with the CEO or the board of corporation, and the subjects with the shareholders, bring out the quintessence of Corporate Governance, because central to the concept of Corporate Governance is the

belief that public good should he ahead of private good and that the corporations resources cannot be used for personal benefit.

(i)

RAKSHA ---

literally means protection, in the corporate scenario it can be equated with the risk management aspects.

(ii)

VRIDHI ---

literally means growth, in the present day context can be equated to stakeholder value enhancement.

(iii)

PALANA ---

literally means maintenance/compliance, in the present day context it can be equated to compliance to the law in letter and spirit.

(iv)

YOGAKSHEMA --- literally means well being and in Kautilyas Arthashastra it is used in context of a social security system. In the present day context it can be equated to corporate social responsibility.

Arthashastra talks self-discipline for a king and the six enemies which a king should overcome lust, anger, greed, conceit, arrogance and foolhardiness. In the present day context, this addresses the ethics aspects of businesses and the personal ethics of the corporate leaders.

DEFINATION OF CORPORATE GOVERNANCE

There is no universal definition of Corporate Governance. In the narrowest sense, Boble laureate Milton Friedman defined Corporate Governance as The conduct of business in accordance with shareholders desires, which generally is to make as much money as possible, while conforming to the basic rules of the society embodied in law and local customs. Some of the definitions of Corporate Governance are given herein below:Monks and Minow have defined Corporate Governance as Relationship among various participants in determining the direction and performance of corporation. The primary participants in a corporation are the tripod of shareholders, managementled by the CEO and the Board of Directors. There are other participants as well such as

the employees, customers, suppliers, creditors and the community. Keeping in view the interests of various stakeholders in a Company Corporate Governance is concerned with effective management of relationships. It requires the formulation of the value framework, the ethical framework and the moral framework which will guide the decision-making process. According to James D Wolfensohn, President of World Bank, Corporate Governance is about promoting Corporate fairness, transparency and accountability. Standard & Poors has defined Corporate Governance as the way a Company is organized and managed to ensure that all financial stakeholders (Shareholders and Creditors) receive their fair share of a Companys earnings and assets. ICSI has also defined the term Corporate Governance as under: Corporate Governance is the application of best management practices, compliances of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders The Principles of Corporate Governance evolved by the ICSI are as under:Sustainable development of all stakeholders To ensure growth of all individual associate with or effected by the enterprise on sustainable basis. Effective management and distribution of wealth To ensure that enterprise creates maximum wealth and judiciously uses the wealth so created for providing maximum benefits to all stakeholders and enhancing its wealth creation capabilities to maintain sustainability. Discharge of social responsibility - To ensure that enterprise is acceptable to the society in which it is functioning. Application of best management practices To ensure excellence in functioning of enterprises and optimum creation of wealth on sustainable basis.

Compliance of law in letter and spirit To ensure value enhancement for all stakeholders guaranteed by the law for maintaining socio-economic balance. Adherence to ethical standards To ensure integrity, transparency, independence and accountability in dealings with all stakeholders.

Corporate Governance by Inner Consciousness

To be able to do the right thing in the right way, in each case and at every moment, one must be in the right consciousness. Most companies strive to maximize shareholder wealth - a goal that is inadequate. As an emotional catalyst, wealth maximization lacks the power to fully mobilize human energies.... Tomorrows management systems must give as much credence to such timeless human ideals as beauty, justice, truth, love as they do to the traditional goals of efficiency, advantage and profit. Lee Kuan Yew was the first Prime Minister of Singapore and a nation-builder. He built Singapore into one of the best-governed city-states in the world. One of the main factors behind Lees success is that he asked the right question: what makes good governance? and found the right answer: To get good government you must have good men in charge of government. I have observed in the last 40 years that even with a poor system of government but with good strong men, people get passable government with decent progress. In other words, the essence of good governance lies not in the paraphernalia of systems and procedures but on the quality of people who create, govern or operate the systems. We may take one step further and deeper than Lee and ask on what depends the quality of the people? It is Consciousness. The essence of a human being is consciousness. And the world we create around us is the expression of our consciousness. The creative and the beautiful as well as the corrupt and degenerate are the outcome of our consciousness. The great thoughts and deeds of Mahatma Gandhi or Mother Teresa are the result of their consciousness. Similarly, the scams of WorldCom and Satyam are also the result of corresponding consciousness. The quality of our consciousness is not

determined by the IQ of our intellect. The swindlers behind most of the scams are high IQ guys. Who brought down Lehman Brothers and sank the world-economy into the waters of recession? They are the super smart MBAs of top B-schools of the world. The quality of a persons consciousness depends on which part of the consciousness s/he lives. There are two parts in our consciousness. First is the lower physical-vital being driven predominantly by self-interest, material needs and sensuous desires, quite often degenerating into greed. The second is the higher mental, moral and spiritual being seeking for truth, beauty, goodness, harmony and unity. The Corporate Governance, to be truly effective and enduring, has to be based on this higher part of our human nature or consciousness. An important quality of this higher part of our consciousness is self-governance. This higher self in us doesnt need the threat of external Law or the lure of an external Reward to remain good or ethical; it has an intrinsic motivation for ethics and selfregulating. This ideal of self-governance must be highest goal of all governance. Selfgoverning Individual in a self-governing Community must be the highest ideal of Corporate Governance. We are, individually and collectively, still far away from this ideal. We still need laws because we are not yet ready for self-governance. But we must keep this ideal as a pole-star and gradually progress or evolve towards it through a combination of enlightened regulation of the external environment and inner transformation through education and inner discipline.

CLAUSE

49

OF

THE

LISTING

AGREEMENT

ON

CORPORATE

GOVERNANCE
Clause 49 of the Listing Agreement, which deals with Corporate Governance norms that a listed entity should follow, was first introduced in the financial year 2000-01 based on recommendations of Kumar Mangalam Birla committee. After these recommendations were in place for about two years, SEBI, in order to evaluate the adequacy of the existing practices and to further improve the existing practices set up a committee under the Chairmanship of Mr. Narayanamurthy during 2002-03. The Murthy committee, after holding three meetings, had submitted the draft recommendations on Corporate Governance norms. After deliberations, SEBI accepted the recommendations in August 2003 and asked the Stock Exchanges to revise Clause 49 of the Listing Agreement based on Murthy committee recommendations. This led to widespread protests and representations from the Industry thereby forcing the Murthy committee to meet again to consider the objections. The committee, thereafter, considerably revised the earlier recommendations and the same was put up on SEBI website on 15th December 2003 for public comments. It was only on 29thOctober 2004 that SEBI finally announced revised Clause 49, which will have to be implemented by the end of financial year 2004-05. These revised recommendations have also considerably diluted the original Murthy Committee recommendations. Areas where major changes were made include: Independence of Directors Whistle Blower policy Performance evaluation of non- executive directors Mandatory training of non-executive directors, etc. The changes in Corporate Governance norm as prescribed in the revised Clause 49 are as follows: A. Composition of Board The revised Clause prescribes six tests, which a non-executive director needs to pass to qualify as an Independent Director. The existing requirement is that to qualify as an

Independent Director, the director should not have, apart from receiving directors remuneration, any other material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in the judgment of the Board may affect independence of judgment of the director. This requirement finds place in the revised clause also except that the relationship will now extend to its management, its holding company and its associates in addition to the existing list. Further the Board is no longer required to judge the independence status of a director as at present. Five new clauses have been added to determine independence of a director. These are: (i) He is not related to promoters or persons occupying management positions at the board level or at one level below the board; (ii) He has not been an executive of the company in the preceding three financial years; (iii) He is not a partner or an executive or was not partner or an executive during the preceding three years of:(a) the statutory audit firm or the internal audit firm that is associated with the company; and (b) the legal and consulting firms that have a material association with the company. (iv) He is not a material supplier, service provider or customer or a lessor or lessee of the company, and (v) He is not a substantial shareholder of the company owning two percent or more of the block of voting shares. The new tests of independence, the readers would recall, were mostly included in the Companies (Amendment) Bill, 2003. The important and practical change that has now been made is addition of the word material in item (iv) above. Without use of the word material, technically even a single supply or purchase by the director to or from the company would have taken away independence status if he/she was otherwise eligible. However, the word material has not been defined. Nominee directors of Institutions are now to be considered as Independent Director. While on the subject of Independent Director

one must remember that no one is invited to join a board to act as a non- executive director unless he/she is well known to the Promoters or the Chairman or the Managing Director. All non-executive directors, whether or not independent, need support of Promoter Group for their reelection. If the purpose or objective of having a specified number of independent directors on the boards of listed companies is to ensure that boards are not packed with yes-men or to ensure constructive criticism one needs to ponder how many independent directors can freely raise questions at board meetings. Is it right that a vast majority of them invariably support every proposal of management? Only a few persons who are eminent in their own fields may ask right questions, even if they look inconvenient, at board meetings but the majority may not muster enough courage to do so. It may therefore appear that no amount of regulation can ensure how an independent director should behave at board meetings. After all independence is a matter of attitude and a director who is conscious about his responsibilities, will always raise right questions at board meetings, whether or not he holds the independent status. The original recommendation of the Murthy Committee for mandatory training and updating of knowledge of directors has now been shifted to non-mandatory requirement, most probably in the face of strong opposition from industry. This indeed is sad as a vast majority of directors are in need of training in the business model of the company and for updating of knowledge. 2/3rd of the members of Audit committee shall be independent directors as against the present requirement of majority being independent. I do believe that a beginning in this regard was immediately necessary. It may not be out of place to mention here that under the Listing requirements of UK all directors are mandatory required to regularly update and refresh their skills and knowledge. From the point of view of listed companies, a declaration should be obtained annually from all independent directors confirming compliance with all six conditions of independence.

B. Non-Executive Directors compensation & disclosures

A new requirement has been provided for obtaining prior approval of shareholders for payment of fees/compensation to non-executive directors. If there is stock option, the limit for the maximum number that can be granted to non-executive directors in any

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financial year and in aggregate should be disclosed. According to the Companies Act, 1956 fees paid to directors do not form part of Managerial remuneration and hence no approval of shareholders for payment of fees to directors is required. Listed companies will now need to obtain prior approval of shareholders for payment of sitting fees to directors. Unless the Government is contemplating to change the law and bring sitting fees within the ambit of Managerial remuneration this contradiction should have been avoided. C. Other provisions relating to Board (i) Gap between two meetings has been reduced to three months from four months ruling at present. (ii) A code of Conduct for Board members and senior management has to be laid down by the Board which should be posted on the website of the company. All Board members and senior management should affirm compliance with the code on annual basis and the annual report shall contain a declaration to this effect signed by the CEO. D. Audit Committee Following are the changes with regard to Audit Committee: (i) 2/3rd of the members of Audit committee shall be independent directors as against the present requirement of majority being independent; (ii) Earlier, only non-executive directors could be members of Audit committee. The revised clause has omitted this requirement. (iii) All members of the Audit committee shall be financially literate (as defined in the revised clause) as against the existing requirement of at least one member having financial and accounting knowledge. (iv) Minimum number of Audit committee meetings in a year increased to 4 from 3. (v) Role of the Audit committee has been enlarged to include (a) matters required to be included in Directors Responsibility statement; (b) to review the functioning of Whistle Blower mechanism if the same is existing (c) review of performance of statutory and internal auditors. (vi)The Audit committee will also mandatorily review

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(a) Management Discussion and Analysis of Financial condition and results of operations; (b) Statement of significant related party transactions; (c) Management letters/letters of internal control weaknesses issued by the statutory auditors; (d) Internal audit reports relating to internal control weaknesses, and (e) To review the appointment, removal and terms of remuneration of the Chief Internal Auditor. The Audit committee will no longer be required to review the companys financial and risk management policies. Risk assessment and minimization procedures will now be reviewed by the Board. The CEO/CFO Certification is a new requirement and is based on Sarbanes Oxley Act of USA. Five new items have been added under non- mandatory requirements and the existing item on Postal ballot has been deleted. Listed companies should now ascertain from their respective Audit committees the frequency of reporting related party transactions, frequency of discussing Management letters issued by the statutory auditors etc. E. Subsidiary Companies These are new requirements, which provide for the following: (i) At least one independent director on the Board of the holding company shall be a director on the board of a material non-listed Indian subsidiary company; (ii) The audit committee of the holding company shall review the financial statements, in particular, the investments made by the unlisted subsidiary company; (iii) The minutes of board meetings of the unlisted subsidiary company shall be placed at the board meeting of the holding company. The management should periodically bring to the attention of the holding company a statement of all significant transactions and arrangements entered into by the unlisted subsidiary company.

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Attention of the readers is drawn to the following: (a)Material non-listed Indian subsidiary has been mentioned only for Board representation. In respect of review of financial statements of unlisted subsidiary by the audit committee of holding company and placing of minutes and significant transactions entered into by subsidiary, it is significant that the words material and Indian have not been used. It can there-fore be interpreted that board meeting minutes, financial statements and significant transactions of all unlisted subsidiaries whether incorporated in India or abroad are to be placed before the board of the holding company or to be reviewed by the audit committee of the holding company. Is this the intention? (b) Material non-listed Indian subsidiary shall mean an unlisted subsidiary, incorporated in India, whose turnover or net worth exceeds 20% of the consolidated turnover or net worth respectively of the listed company and its subsidiaries. This definition is likely to exclude most of the unlisted subsidiaries as they are not likely to meet the turnover or net worth test. (c)Significant transaction or arrangement shall mean any individual transaction that exceeds 10% of the total revenues/expenses/assets/liabilities of the subsidiary. It is difficult to understand the logic of excluding subsidiaries incorporated abroad from the purview of representation on the board by an independent director. Disclosures Following new disclosure requirements have been specified in the revised clause 49: (i) Statement on transactions with related parties in the ordinary course of business shall be placed before the Audit committee periodically; (ii) Details of material individual transactions with related parties which are not in the normal course of business shall be placed before the Audit committee; and (iii) Details of material individual transactions with related parties or others, which are not on arms length basis should be placed before Audit committee together with managements justification for the same. Here also, the word material has not been

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defined. Listed companies should ascertain from their respective audit committees the frequency of reporting such transactions. (iv) Financial statements should disclose together with managements explanation any accounting treatment different from that prescribed in Accounting Standard. (v)The company will lay down procedures to inform board members about the risk assessment and minimization procedures which shall be periodically reviewed by the Board. (vi) The company shall disclose to the Audit committee on a quarterly basis the use of funds raised through public/ rights/preferential issues. Annually a statement showing use of funds for purposes other than those stated in Offer document/prospectus should be placed before the Audit committee. Such statement should be certified by the statutory auditors. (vii)Under Remuneration of Directors new disclosure requirements have been prescribed, which include criteria of making payments to non- executive directors, shares and convertible instruments held by non-executive directors and shareholding (both own and held on beneficial basis) of non- executive directors to be disclosed in the notice of general meeting called for approving appointment of such director.

G. CEO/CFO Certification This is a new requirement and is based on the Sarbanes Oxley Act of USA. This had also been recommended by the Naresh Chandra Committee set up by the Centre in 2002-03. The revised clause only requires CEO and CFO to certify to the Board the annual financial statements in the prescribed format. While this certification will certainly provide comfort to the non-executive directors and will indeed act as the basis for the Board to make Directors Responsibility Statement in terms of section 217(2AA) of the Companies Act, 1956, it is not clear why SEBI did not require the listed companies to include such certification in the Annual Report. H. Compliance Report

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The format of quarterly report to be submitted to the Stock Exchanges has been revised and the new format follows the revised requirements of Clause 49. The CEO or the Compliance officer can now sign the compliance report. The annual Corporate Governance report should disclose adoption or non-adoption of non-mandatory requirements. I. Non-mandatory requirements Five new items have been added under non-mandatory requirements and the existing item on Postal ballot has been deleted. The first new item states that Independent directors may not have tenure not exceeding in the aggregate a period of nine years on the Board of the company. The next item relates to companies moving towards a regime of unqualified audit report. The third item deals with training of board members in the business model of the company as well as risk profile of the business parameters of the company and responsibilities of directors and how best to discharge it. The fourth item deals with performance evaluation of non-executive directors by a peer group comprising the entire Board. The fifth item relates to setting up of a whistle blower policy in the company. While the new Corporate Governance norms are more stringent than the existing requirements it must be appreciated that while regulations in these areas are necessary, regulations per se cannot and will not ensure good Corporate Governance. Attention of readers is drawn towards the Report on Observance of Standards and Codes carried out under a joint programmed of World Bank and IMF. This report bench- marks the observance of Corporate Governance in India against the benchmark Principles of Corporate Governance laid down by the Organization for Economic Cooperation and Development (OECD). The assessment team had extensively interviewed issuers, institutional investors, financial institutions, market analysts, lawyers, accountants and auditors. The report was also discussed by Government of India and cleared by the DEA for publication in June 2004. Following are the areas identified for reform in the World Bank report: While the new Corporate Governance norms are more stringent than the existing requirements it must be appreciated that while regulations in these areas are necessary, regulations per se cannot and will not ensure good Corporate Governance

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a. Sanctions and enforcements should be credible deterrents to help align business practices with the legal and regulatory framework, in particular with regard to related party transactions and insider trading. b. The current framework places the oversight of listed companies partly with DCA, partly with SEBI and partly with Stock exchanges. This fragmented structure gives rise to regulatory arbitrage and weakens enforcement. c. If boards are to move away from simply rubber stamping the decisions of management or promoters they must have a clear understanding of what is expected from them. They should know their duties of care and loyalty to the company and all shareholders. They should know their responsibilities and should be familiar with the changes in this regard arising from changes in laws and regulations. A key missing ingredient is a strong focus on professionalism of directors. Director training institutes can play a key capacity building role and expand the pool of competent candidates. d. Institutional investors acting in a fiduciary capacity should be encouraged to form a comprehensive Corporate Governance policy including voting and board representation. It will be observed that the World Bank report has stressed the need of training and updating of knowledge of directors. Unfortunately the recommendation of Murthy Committee in this regard has now been shifted as non-mandatory requirement. The rationale of industrys objection to mandatory training, etc. of directors is not readily understandable. Hopefully, when the governance norms are reviewed next the training and knowledge updating would be made mandatory requirement. A new requirement has been provided for obtaining prior approval of shareholders for payment of fees/compensation to non- executive directors. If there is stock option, the limit for the maximum number that can be granted to non- executive directors in any financial year and in aggregate should be disclosed.

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SURVEY REPORT ON THE STATE OF CORPORATE GOVERNANACE IN INDIA

- A POLL CONDUCTED BY KPMG

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INTRODUCTORY NOTE
About this poll This poll The State of Corporate Governance in India is an initiative of KPMG in India. The pollinvolvedover 90 respondents comprising CEOs, CFOs, independent directors and similar leaders, who were asked about the journey, experience and the outlook for corporate governance in India. The respondents are predominantly from private equity firms, financial services and the manufacturing sector. Corporate governance by inner consciousness helps an organization achieve several objectives and some of the more important ones include: Developing appropriate strategies that result in the achievement of stakeholder objectives Attracting, motivating and retaining talent Creating a secure and prosperous operating environment and improving operational Performance Managing and mitigating risk and protecting and enhancing the companys reputation. Some aspects covered in the poll include: Corporate governance regulations in India Corporate governance concerns in India and role of independent directors and audit committees in addressing these concerns Board practices, board oversight of risk management and the importance given to integrity and ethical values Practices that are fundamental to improved corporate governance.

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The results which are augmented by comment from KPMG in India also provide a useful contribution to the debate on how Indian companies can improve standards of corporate behavior which do justice to the spirit behind the rules.

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CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009

Good Corporate Governance practices are a sine qua non for sustainable business that aims at generating long term value to all its shareholders and other stakeholders. Some aspects of Corporate Governance have been enshrined in the law that is administered by the Ministry of Corporate Affairs, SEBI and other sectoral regulators. However, a transparent, ethical and responsible Corporate Governance framework essentially emanates from the intrinsic will and passion for good governance ingrained in the business entity. During the stakeholders consultation under the aegis of the National Foundation for Corporate Governance, the idea of developing voluntary guidelines on Corporate Governance found wide support from all stakeholders. We had the benefit of the report of the Task Force of CII on Corporate Governance headed by Shri Naresh Chandra and the recommendations of the ICSI for strengthening Corporate Governance framework. We have Good Corporate Governance is essential for the integrity corporations, financial institutions and markets. It ensures the health of our economies and their stability. Indias The Corporate Governance -Voluntary Guidelines 2009, being proposed for voluntary adoption by the Corporate Sector have taken into account the recommendations of the Task Force set up by Confederation of Indian Industry (CII) under chairmanship of Shri Naresh Chandra in February, 2009 to recommend ways to further improve Corporate Governance standards and practices Good Corporate Governance practices enhance companies value and stakeholders trust resulting into robust development of capital market,the economy and also help in the evolution of a vibrant and constructive shareholders activism. These guidelines provide for a set of good practices which may be voluntarily adopted by the Public companies. Private companies, particularly the bigger ones, may also like to adopt these guidelines. The guidelines are not intended to be a substitute for or addition to the existing laws but are recommendatory in nature

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I. BOARD OF DIRECTORS
A. APPOINTMENT OF DIRECTORS A.1 Appointments to the Board i. Companies should issue formal letters of appointment to Non-Executive Directors (NEDs) and Independent Directors - as is done by them while appointing employees and Executive Directors. The letter should specify: The term of the appointment; The expectation of the Board from the appointed director; the Board-level committee(s) in which the director is expected to serve and its tasks; The fiduciary duties that come with such an appointment along with accompanying liabilities; Provision for Directors and Officers (D&O) insurance, if any,; The Code of Business Ethics that the company expects its directors and employees to follow; The list of actions that a director should not do while functioning as such in the company; and The remuneration, including sitting fees and stock options etc, if any. ii. Such formal letter should form a part of the disclosure to shareholders at the time of the ratification of his/her appointment or re-appointment to the Board. This letter should also be placed by the company on its website, if any, and in case the company is a listed company, also on the website of the stock exchange where the securities of the company are listed. A.2 Separation of Offices of Chairman & CEO To prevent unfettered decision making power with a single individual, there should be a clear demarcation of the roles and responsibilities of the Chairman of the Board and that of the Managing Director/Chief Executive Officer (CEO). The roles and offices of

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Chairman and CEO should be separated, as far as possible, to promote balance of power. A.3 Nomination Committee i The companies may have a Nomination Committee comprising of majority of Independent Directors, including its Chairman. This Committee should consider: proposals for searching, evaluating, and recommending appropriate Independent Directors and Non-Executive Directors [NEDs], based on an objective and transparent set of guidelines which should be disclosed and should, inter-alia, include the criteria for determining qualifications, positive attributes, independence of a director and availability of time with him or her to devote to the job; determining processes for evaluating the skill, knowledge, experience and effectiveness of individual directors as well as the Board as a whole. ii. With a view to enable Board to take proper and reasoned decisions, Nomination Committee should ensure that the Board comprises of a balanced combination of Executive Directors and Non-Executive Directors. iii. The Nomination Committee should also evaluate and recommend the appointment of Executive Directors. iv. A separate section in the Annual Report should outline the guidelines being followed by the Nomination Committee and the role and work done by it during the year under consideration. A.4. Number of Companies in which an Individual may become a Director i. For reckoning the maximum limit of directorships, the following categories of companies should be included: public limited companies, private companies that are either holding or subsidiary companies of public companies.

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ii. In case an individual is a Managing Director or Whole-time Director in a public company the maximum number of companies in which such an individual can serve as a Non-Executive Director or Independent Director should be restricted to seven. 11 B. INDEPENDENT DIRECTORS B.1 Attributes for Independent Directors i. The Board should put in place a policy for specifying positive attributes of Independent Directors such as integrity, experience and expertise, foresight, managerial qualities and ability to read and understand financial statements. Disclosure about such policy should be made by the Board in its report to the shareholders. Such a policy may be subject to approval by shareholders. ii. All Independent Directors should provide a detailed Certificate of Independence at the time of their appointment, and thereafter annually. This certificate should be placed by the company on its website, if any, and in case the company is a listed company, also on the website of the stock exchange where the securities of the company are listed. B.2 Tenure for Independent Director i. An Individual may not remain as an Independent Director in a company for more than six years. ii. A period of three years should elapse before such an individual is inducted in the same company in any capacity. iii. No individual may be allowed to have more than three tenures as Independent Director in the manner suggested in 'i' and 'ii' above. iv. The maximum number of public companies in which an individual may serve as an Independent Director should be restricted to seven. B.3 Independent Directors to have the Option and Freedom to meet Company Management periodically

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i. In order to enable Independent Directors to perform their functions effectively, they should have the option and freedom to interact with the company management periodically. ii. Independent Directors should be provided with adequate independent office space and other resources and support by the companies including the power to have access to additional information to enable them to study and analyze various information and data provided by the company management. 12 C. REMUNERATION OF DIRECTORS C.1 Remuneration C.1.1 Guiding Principles-Linking Corporate and Individual Performance i. The companies should ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully. It should also be ensured that relationship of remuneration to performance is clear. Incentive schemes should be designed around appropriate performance benchmarks and provide rewards for materially improved company performance. Benchmarks for performance laid down by the company should be disclosed to the members annually. ii. Remuneration Policy for the members of the Board and Key Executives should be clearly laid down and disclosed. Remuneration packages should involve a balance between fixed and incentive pay, reflecting short and long term performance objectives appropriate to the company's circumstances and goal. iii. The performance-related elements of remuneration should form a significant proportion of the total remuneration package of Executive Directors and should be designed to align their interests with those of shareholders and to give these Directors keen incentives to perform at the highest levels. C.1.2 Remuneration of Non-Executive Directors (NEDs):

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i. The companies should have the option of giving a fixed contractual remuneration, not linked to profits, to NEDs. The companies should have the option to:

(a) Pay a fixed contractual remuneration to its NEDs, subject to an appropriate

ceiling depending on the size of the company; or

(b) Pay upto an appropriate percent of the net profits of the company.
ii. The choice should be uniform for all NEDs, i.e. some should not be paid a commission on profits while others are paid a fixed amount. iii. If the option chosen is 'i(a)' above, then the NEDs should not be eligible for any commission on profits. iv. If stock options are granted as a form of payment to NEDs, then these should be held by the concerned director until three years of his exit from the Board. C.1.3 Structure of Compensation to NEDs i. The companies may use the following manner in structuring remuneration to NEDs: Fixed component: This should be relatively low, so as to align NEDs to a greater share of variable pay. These should not be more than one-third of the total remuneration package. Variable component: Based on attendance of Board and Committee meetings (at least 75% of all meetings should be an eligibility pre-condition) Additional variable payment(s) for being:

the Chairman of the Board, especially if he/she is a nonexecutive

chairman

the Chairman of the Audit Committee and/or other committees members of Board committees.

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ii. If such a structure (or any similar structure) of remuneration is adopted by the Board, it should be disclosed to the shareholders in the Annual Report of the company.

C.1.4. Remuneration of Independent Directors (IDs) i. In order to attract, retain and motivate Independent Directors of quality to contribute to the company, they should be paid adequate sitting fees which may depend upon the twin criteria of Net Worth and Turnover of companies. ii. The IDs may not be allowed to be paid stock options or profit based commissions, so that their independence is not compromised. C.2 Remuneration Committee i. Companies should have Remuneration Committee of the Board. This Committee should comprise of at least three members, majority of whom should be nonexecutive directors with at least one being an Independent Director. ii. This Committee should have responsibility for determining the remuneration for all executive directors and the executive chairman, including any compensation payments, such as retirement benefits or stock options. It should be ensured that no director is involved in deciding his or her own remuneration. iii. This Committee should also determine principles, criteria and the basis of remuneration policy of the company which should be disclosed to shareholders and their comments, if any, considered suitably. Whenever, there is any deviation from such policy, the justification/reasons should also be indicated/disclosed adequately. iv. This Committee should also recommend and monitor the level and structure of pay for senior management, i.e. one level below the Board. v. This Committee should make available its terms of reference, its role, the authority delegated to it by the Board, and what it has done for the year under review to the shareholders in the Annual Report.

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A. Training of Directors i. The companies should ensure that directors are inducted through a suitable familiarization process covering, inter-alia, their roles, responsibilities and liabilities. Efforts should be made to ensure that every director has the ability to understand basic financial statements and information and related documents/papers. There should be a statement to this effect by the Board in the Annual Report. ii. Besides this, the Board should also adopt suitable methods to enrich the skills of directors from time to time. B. Enabling Quality Decision making The Board should ensure that there are systems, procedures and resources available to ensure that every Director is supplied, in a timely manner, with precise and concise information in a form and of a quality appropriate to effectively enable/ discharge his duties. The Directors should be given substantial time to study the data and contribute effectively to Board discussions. C. Risk Management i. The Board, its Audit Committee and its executive management should collectively identify the risks impacting the company's business and document their process of risk identification, risk minimization, risk optimization as a part of a risk management policy or strategy. ii. The Board should also affirm and disclose in its report to members that it has put in place critical risk management framework across the company, which is overseen once every six months by the Board. The disclosure should also include a statement of those elements of risk, that the Board feels, may threaten the existence of the company. D. Evaluation of Performance of Board of Directors, Committees thereof and of Individual Directors

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The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. The Board should state in the Annual Report how performance evaluation of the Board, its committees and its individual directors has been conducted. E. Board to place Systems to ensure Compliance with Laws

i.

In order to safeguard shareholders' investment and the company's assets, the Board should, at least annually, conduct a review of the effectiveness of the company's system of internal controls and should report to shareholders that they have done so. The review should cover all material controls, including financial, operational and compliance controls and risk management systems.

ii.

The Directors' Responsibility Statement should also include a statement that proper systems are in place to ensure compliance of all laws applicable to the company. It should follow the comply or explain principle.

iii.

For every agenda item at the Board meeting, there should be attached an Impact Analysis on Minority Shareholders proactively stating if the agenda item has any impact on the rights of minority shareholders. The Independent Directors should discuss such Impact Analysis and offer their comments which should be suitably recorded.

A. Audit Committee Constitution The companies should have at least a three-member Audit Committee, with Independent Directors constituting the majority. The Chairman of such Committee should be an Independent Director. All the members of audit committee should have knowledge of financial management, audit or accounts.

B. Audit Committee Enabling Powers:

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i. The Audit Committee should have the power to

have independent back office support and other resources from the company; have access to information contained in the records of the company; and obtain professional advice from external sources.

ii.

The Audit Committee should also have the facility of separate discussions with both internal and external auditors as well as the management.

C. Audit Committee - Role and Responsibilities i. The Audit Committee should have the responsibility to monitor the integrity of the financial statements of the company; review the company's internal financial controls, internal audit function and risk management systems; make recommendations in relation to the appointment, reappointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor; III. AUDIT COMMITTEE OF THE BOARD i Review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process. ii. The Audit Committee should also monitor and approve all Related Party Transactions including any modification/amendment in any such transaction. iii. A statement in a prescribed/structured format giving details about all related party transactions taken place in a particular year should be included in the Board's report for that year for disclosure to various stake holders. A. Appointment of Auditors

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i. The Audit Committee of the Board should be the first point of reference regarding the appointment of auditors. ii. The Audit Committee should have regard to the profile of the audit firm, qualifications and experience of audit partners, strengths and weaknesses, if any, of the audit firm and other related aspects. iii. To discharge its duty, the Audit Committee should: discuss the annual work programme and the depth and detailing of the audit plan to be undertaken by the auditor, with the auditor; examine and review the documentation and the certificate for proof of independence of the audit firm, and recommend to the Board, with reasons, either the appointment/re-appointment or removal of the statutory auditor, along with the annual audit remuneration. B. Certificate of Independence i. Every company should obtain a certificate from the auditor certifying his/its independence and arm's length relationship with the client company. ii. The Certificate of Independence should certify that the auditor together with its consulting and specialized services affiliates, subsidiaries and associated companies or network or group entities has not/have not undertaken any prohibited non-audit assignments for the company and are independent vis--vis the client company. C. Rotation of Audit Partners and Firms i. In order to maintain independence of auditors with a view to look at an issue (financial or non-financial) from a different perspective and to carry out the audit exercise with a fresh outlook, the company may adopt a policy of rotation of auditors which may be as under: Audit partner - to be rotated once every three years Audit firm - to be rotated once every five years.

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ii. A cooling off period of three years should elapse before a partner can resume the same audit assignment. This period should be five years for the firm.

D. Need for clarity on information to be sought by auditor and/or provided by the company to him/it i. With a view to ensure proper and accountable audit, there should be clarity between company management and auditors on the nature and amount of information/documents/ records etc and periodicity/frequency for supply/obtaining such information/ documents/ records etc. ii. In any case the auditor concerned should be under an obligation to certify whether he had obtained all the information he sought from the company or not. In the latter case, he should specifically indicate the effect of such non receipt of information on the financial statements. E. Appointment of Internal Auditor In order to ensure the independence and credibility of the internal audit process, the Board may appoint an internal auditor and such auditor, where appointed, should not be an employee of the company. VI. INSTITUTION OF MECHANISM FOR WHISTLE BLOWING Since the Board has the overarching responsibility of ensuring transparent, ethical and responsible governance of the company, it is important that the Board processes and compliance mechanisms of the company are robust. To ensure this, the companies may get the Secretarial Audit conducted by a competent professional. The Board should give its comments on the Secretarial Audit in its report to the shareholders. i. The companies should ensure the institution of a mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the company's code of conduct or ethics policy.

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ii. The companies should also provide for adequate safeguards against victimization of employees who avail of the mechanism, and also allow direct access to the Chairperson of the Audit Committee in exceptional cases. 20

CASE STUDIES ON CORPORATE GOVERNANCE BY INNER CONSCIOUSNESS

CASE STUDY No.1 DANIEL ELLSBURG

Daniel Ellsberg, Ph.D. (born April 7, 1931) is a former United States military analyst who, while employed by the RAND Corporation, precipitated a national political controversy in 1971 when he released the Pentagon Papers, a top-secretPentagon study of U.S. government decision-making in relation to the Vietnam War, to The New York Times and other newspapers. He was awarded the Right Livelihood Award in 2006. Early life and career He earned a Ph.D. in Economics from Harvard in 1962. His dissertation introduced a paradox in decision theory now known as the Ellsberg paradox. Ellsberg served in the Pentagon from August 1964 under Secretary of DefenseRobert McNamara (and, in fact, was on duty on the evening of the Gulf of Tonkin incident, reporting the incident to McNamara). He then served for two years in Vietnam working for General Edward Lansdale as a civilian in the State Department.

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After serving in Vietnam, Ellsberg resumed working at RAND. In 1967, he contributed to a top-secret study of classified documents regarding the conduct of the Vietnam War that had been commissioned by Defense Secretary McNamara. These documents, completed in 1968, later became known collectively as the Pentagon Papers. It was because Ellsberg held an extremely high-level security clearance and desired to create a further synthesis from this research effort that he was one of very few individuals who had access to the complete set of documents. Disaffection with Vietnam War By 1969 Ellsberg began attending anti-war events while still remaining in his position at RAND. He experienced an epiphany attending a War Resisters League conference at Haverford College in August 1969, listening to a speech given by a draft resister named Randy Kehler, who said he was "very excited" that he would soon be able to join his friends in prison. Decades later, reflecting on Kehler's decision, Ellsberg said; Randy Kehler never thought his going to prison would end the war. If I hadn't met Randy Kehler it wouldn't have occurred to me to copy the Pentagon Papers. His actions spoke to me as no mere words would have done. He put the right question in my mind at the right time. The Pentagon Papers In late 1969with the assistance of his former RAND Corporation colleague Anthony Russo and the staff of Senator Edward KennedyEllsberg secretly made several sets of photocopies of the classified documents to which he had access; these later became known as the Pentagon Papers. They revealed that the government had knowledge, early on, that the war could most likely not be won, and that continuing the war would lead to many times more casualties than was ever admitted publicly. Further, the papers showed the government had lied to Congress and the public. Throughout 1970, Ellsberg covertly attempted to persuade a few sympathetic U.S. Senators among them J. William Fulbright, chair of the Senate Foreign Relations Committee, and George McGovern, a leading opponent of the war to release the

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papers on the Senate floor, because a Senator could not be prosecuted for anything he said on the record before the Senate. Ellsberg told U.S. Senators that they should be prepared to go to jail in order to end the Vietnam War. Ellsberg allowed some copies of the documents to circulate privately, including among scholars at the Institute for Policy Studies (IPS). Ellsberg also shared the documents with New York Times correspondent Neil Sheehan under a pledge of confidentiality. Sheehan broke his promise to Ellsberg, and built a scoop around what he'd received both directly from Ellsberg and from contacts at IPS. On Sunday, June 13, 1971, the Times published the first of nine excerpts and commentaries on the 7,000 page collection. For 15 days, the Timeswas prevented from publishing its articles by court order requested by the Nixon administration. Meanwhile, Ellsberg leaked the documents to The Washington Post and 17 other newspapers.On June 30, the Supreme Court ordered publication of the Times to resume freely (New York Times Co. v. United States). Although the Times did not reveal Ellsberg as their source, he went into hiding for 13 days afterwards, suspecting that the evidence would point to him as the source of the unauthorized release of the study. On June 29, 1971, U.S. SenatorMike Gravel of Alaska entered 4,100 pages of the Papers into the record of his Subcommittee on Public Buildings and Groundspages which he had received from Ellsberg via Ben Bagdikianthen an editor at the Washington Post. These portions of the Papers were subsequently published by Beacon Press. Fallout The release of these papers was politically embarrassing not only to those involved in the Kennedy and Johnson administrations but also to the incumbent Nixon administration.

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As a response to the leaks, the Nixon administration began a campaign against further leaks and against Ellsberg personally. Trial and mistrial On June 28, 1971, Ellsberg publicly surrendered to the United States Attorney's Office for the District of Massachusetts in Boston. In admitting to giving the documents to the press, Ellsberg said: I felt that as an American citizen, as a responsible citizen, I could no longer cooperate in concealing this information from the American public. I did this clearly at my own jeopardy and I am prepared to answer to all the consequences of this decision. He and Russo faced charges under the Espionage Act of 1917 and other charges including theft and conspiracy, carrying a total maximum sentence of 115 years. Their trial commenced in Los Angeles on January 3, 1973, presided over by U.S. District Judge William Matthew Byrne, Jr. On April 26, the break-in of Fielding's office was revealed to the court in a memo to Judge Byrne, who then ordered it to be shared with the defense. On May 9, further evidence of illegal wiretapping against Ellsberg was revealed in court. The FBI had recorded numerous conversations between Morton Halperin and Ellsberg

37

without a court order, and furthermore the prosecution had failed to share this evidence with the defense.During the trial, Byrne also revealed that he personally met twice with John Ehrlichman, who offered him directorship of the FBI. Byrne said he refused to consider the offer while the Ellsberg case was pending, though he was criticized for even agreeing to meet with Ehrlichman during the case. Due to the gross governmental misconduct and illegal evidence gathering, and the defense by Leonard Boudin and Harvard Law School professor Charles Nesson, Judge Byrne dismissed all charges against Ellsberg and Russo on May 11, 1973 after the government claimed it had lost records of wiretapping against Ellsberg. Byrne ruled: "The totality of the circumstances of this case which I have only briefly sketched offend a sense of justice. The bizarre events have incurably infected the prosecution of this case." Later activism and views Reflecting on his time in government, Ellsberg has said the following, based on his extensive access to classified material: The public is lied to every day by the President, by his spokespeople, by his officers. If you can't handle the thought that the President lies to the public for all kinds of reasons, you couldnt stay in the government at that level, or youre made aware of it, a week. ... The fact is Presidents rarely say the whole truth essentially, never say the whole truthof what they expect and what theyre doing and what they believe and why theyre doing it and rarely refrain from lying, actually, about these matters. Since the end of the Vietnam War, Ellsberg has continued his political activism, giving lecture tours and speaking out about current events. He is a member of Campaign for Peace and Democracy. Ellsberg was arrested, in November 2005, for violating a county ordinance for trespassing while protesting against George W. Bush's conduct of the Iraq War.

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In September 2006, Ellsberg wrote in Harper's Magazine that he hoped someone would leak information about a potential U.S. invasion of Iran before the invasion happened, to stop the war. Subsequently, information on the acceleration of U.S.-sponsored antigovernment activity in Iran was leaked to journalist Seymour Hersh. In November 2007, Ellsberg was interviewed by Brad Friedman on his Bradblog in regard to former FBI translator turned whistleblowerSibel Edmonds. "I'd say what she has is far more explosive than the Pentagon Papers", Ellsberg told Friedman. On December 9, 2010, Ellsberg appeared on the Colbert Report where he commented that the existence of WikiLeaks helps to build a better government. On March 21, 2011, Ellsberg along with 35 other demonstrators was arrested during a demonstration outside the Marine Corps Base Quantico, in protest of Manning's current detention at Marine Corps Brig, Quantico. Awards and honors Ellsberg is the recipient of the Inaugural Ron Ridenhour Courage Prize, a prize established by The Nation Institute and The Fertel Foundation. In 1978 he accepted the Gandhi Peace Award from Promoting Enduring Peace. On September 28, 2006 he was awarded the Right Livelihood Award.

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CASE STUDY No. 2

SATYENDRA DUBEY

Satyendra Dubey was a 31-year-old IIT Kanpur civil engineering graduate working with the National Highways Authority of India (NHAI)and assigned to the prime minister's pet project, the Golden Quadrilateral, to connect the four corners of India. He was posted at Koderma, Jharkhand.

On discovering rampant corruption and poor implementation of work in the section where he had been posted, Dubey wrote to the prime minister exposing the irregularities. In the letter, received by the prime minister's office on November 11, 2002, he had named some companies. Fearing retribution, he had requested that his name be kept secret.

But PMO officials circulated his letter along with details of his identity among the bureaucrats. While the file was making the rounds, not one official thought about the threat Dubey was being exposed to.

40

Why officials in the PMO did not heed Dubey's request for anonymity is not known. But just over a year later, on November 27, 2003, he was murdered in Gaya, Bihar.

We have adopted the words SatyamevaJayate as a guiding principle. But if truth has to triumph, we must first ensure that it does not killSatyendra Kumar Dubey could have chosen to keep quiet, like the majority of young professionals of this country. He could have continued doing his job as a deputy general manager in the Centres National Highway Authority of India (NHAI) and shut his eyes to the variegated ways in such a prestigious project, instead Dubey opted to do the right thing by alerting the PMO to these developments because he believed the project was of unparalleled importance to the nation. He paid with his life for having done so. The best tribute can be a Whistleblower's Act. Most people are badly hurt by the corruption in our country. This is the time for us, along with various bodies and associations, to get together and initiate a movement for a more honest society and good governance by inner consciousness.

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Roles and Responsibilities of Company Secretary

Company Secretaries in all sectors have high level responsibilities including governance structures and mechanisms, corporate conduct within an organisation's regulatory environment, board, shareholder and trustee meetings, compliance with legal, regulatory and listing requirements, the training and induction of non-executives and trustees, contact with regulatory and external bodies, reports and circulars to shareholders/trustees, management of employee benefits such as pensions and employee share schemes, insurance administration and organisation, the negotiation of contracts, risk management, property administration and organisation and the interpretation of financial accounts.

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Company secretaries are the primary source of advice on the conduct of business and this can span everything from legal advice on conflicts of interest, through accounting advice on financial reports, to the development of strategy and corporate planning. Among public companies in North America, providing advice on corporate governance issues is an increasingly important role for corporate secretaries. Many shareholders, particularly institutional investors, view sound corporate governance as essential to board and company performance. They are quite vocal in encouraging boards to perform frequent corporate governance reviews and to issue written statements of corporate governance principles. The corporate secretary is usually the executive to assist directors in these efforts, providing information on the practices of other companies, and helping the board to tailor corporate governance principles and practices to fit the board's needs and expectations of investors. In some companies, the role of the corporate secretary as corporate governance adviser has been formalized, with a title such as Chief Governance Officer added to their existing title In view of the important roles the Company Secretary plays in business, PLCs and large companies require the Company Secretary to be suitably trained, and professionally qualified for these responsibilities. In the UK, the Company Secretary may be qualified by virtue of examination and membership of the Institute of Chartered Secretaries and Administrators (ICSA), which is the only qualification specifically for company secretaries. ICSA is the only body dedicated to the advancement and recognition of professional administration based on a combination of degree-level studies, carefully vetted experience and sponsorship by two people of professional status. Only a person thus qualified is entitled to be designated a 'Chartered Secretary' or 'Chartered Company Secretary'. In India, ICSI regulates the profession of Company secretaries. ICSI is a statutory professional body which has more than 26,680 associate members. Chartered secretaries are employed as chairs, chief executives and non-executive directors, as well as executives and company secretaries. Some chartered secretaries are also known in their own companies as corporate secretarial executives/managers or corporate secretarial directors.

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Chartered Secretaries are the sixth highest paid employees in the UK according to the Office for National Statistics Annual Survey of Hours and Earnings (March 2010). The average annual salary for Chartered Secretaries is 58,295 and their earnings are ranked above those of senior officers in local government, police officers, IT professionals and lawyers. Chartered Secretaries are increasingly in demand because of their expertise in compliance and corporate governance. Many corporate secretaries of North American public companies are lawyers and some serve as their corporation's general counsel. While this can be helpful in the execution of their duties it can also create ambiguity as to what is legal advice, protected by privilege, and what is business advice. Despite the name, the role is not a clerical or secretarial one in the usual sense. The Company Secretary ensures that an organisation complies with relevant legislation and regulation, and keeps board members informed of their relevant legal responsibilities. Whilst the Combined Code does not attribute direct responsibility for corporate governance to the Company Secretary the secretary may be delegated specific responsibilities in the following areas by the Chairman in order to enable the implementation of the principles and provisions set out in the Code:

1. Board Composition and procedures : Identifying matters reserved for the

board. Ensuring appropriate levels of Directors & Officers Liability insurance is in place and updated arising on changes in board composition; reviewing membership of committees established by the board; advising the board on areas of succession planning and non-executive director (NED) rotation. In addition, the secretary will be responsible for the day to day compliance issues scheduling meetings, circulating agenda's and supporting documentation in a timely manner on matters being put before the board and, the preparation of accurate records of board decisions identifying action points to be addressed at future meetings.

2. Board information and development : Facilitating proper induction and ongoing

training and development needs of board members, particularly NEDs to ensure that new directors are aware of their duties and responsibilities to remain compliant with legislation. Ensuring communication flows between the board and

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the established committees (audit, remuneration, nomination) and, arranging for major shareholder's to be provided with the opportunity to meet new NEDs being appointed to the board. Establishment of procedures identifying requirements for directors to seek independent professional advice should the need arise. Advising the board collectively and individually where the need arises on corporate governance issues enabling the practicalities of the corporate governance framework identified in the Combined Code to be implemented effectively and efficiently.

3. Remuneration: Establishment and ongoing review of membership and the

operation of the remuneration committee in the areas of salaries, granting of options, long-term incentive schemes, NEDs remuneration packages and disclosure requirements to ensure adherence with the provisions contained in the company's Articles of Association, the Listing Rules and the Code.

4. Audit and internal control : The secretary may be required to have a detailed
knowledge of both the Smith and Turnbull Reports which are the basis of the guidance notes in the areas of audit and internal control in order to advise the board on such matters. Such knowledge will be the foundation for the implementation and monitoring of the effective operation of whistle blowing procedures approved by the audit committee.

5. Shareholders : Managing the convening and holding of general meetings of the

company in line with statutory and regulatory requirements. Enabling two way communication flows between the board and shareholders - advising the board on shareholder communications and, updating shareholders on board procedures. Compliance with disclosure requirements on corporate governance issues by the board and its committees in the appropriate format - website, financial reporting, shareholder circulars etc.

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CONCLUSION
Corporate governance is very essential part of our growth. The question is whether our corporate sector is governed by inner consciousness, duty towards the Nation or governed with various factors including the greed factor. Due to happening of the scams, the common man is bound to feel whether there is any governance in our country. People are questioning the professional institutions, democratic institutions, regulatory bodies. These three professional institutions are the trustees of the various stakeholders in the corporate world. The corporate sector is the democratic institution in which people elects representatives to govern them and if they discharge their duties with conscious, the people will trust them. The corporate world and the people entrusted with the responsibility of corporate governance will function as per law, the people will trust them.

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The role and responsibility of CA, CWA and the CS are so important. We need to change the structure of law as the professionals like CA, CWA, and CS are the representatives of the general body of shareholder but they are representing the Board of Directors. Ethical values are very important for every human being. The professional bodies can conduct number of seminars and conferences and spread the message that everybody should work according to the inner consciousness. This report suggests making the society a welfare society and the trust society. Corporate governance is not restricted to the conduct of the business and returns to the shareholders, there is wider acceptance and recognition of the concerns of the sustainability of environment, planet and the Community. These days everybody talks about triple bottom line viz PEOPLE, PROFITS AND PLANET, all three together is something which a corporate sector to deal with. Corporate Governance is more in the nature of responsible governance. The responsibility must come from value system and cannot be mandated by law. There can be different views to treat Corporate Governance viz legal view and financial view. Legal view speaks of justice equity and fairness of treatment. Financial views talks about fair reasonable returns to the investor. The management of risk is very important, the risks goes up if transparency, fair and equitable treatment is not there. The Indian corporate sector is growing but everybody is not participating in it due to difference in capacity of taking the financial risk. He said laws are important apart from values. Value systems are the spiritual and cultural heritage of our country. They enforce lack of conflict & lack of violence. Governance and lack of it impacts whatever we do and all that done to us. Therefore, it is extremely important. Governance is very wider thing and runs through personal, professional & social lives also. Why the corporate governance gets recognition only when there is a failure of governance? This can be taken as importance step and can be included in the fundamental of life and the way of doing business. Corporate Governance is a set of

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procedures and rules that tell us what to do and how it is different from just an operational manual. Governance is supported by values and that is the fundamental difference between the two. Corporate Governance will not only tell what to do and how to do but it also tells how to do right. The values do not come from manual but they come from inner consciousness. Believing in corporate governance is important to make it happen. Corporate Governance cannot be legislated it is the substance which is very important without that corporate governance is meaningless. The commitment to corporate governance has to come from firm conviction. How India adopted and imbibed the spirit of corporate governance? Indians understand the spirituality and the value system. In India business houses have adopted particular type of value system. Government has adopted a practice of black listing the business houses; suppliers etc. who have indulged into unfair trade practices. Whatever we do by following the value systems will be there forever and have the everlasting effect. The way corporate governance has been adopted by the Indian corporate world is that the legal formalities have been adopted by them very well but the inner sense of corporate governance yet to be imbibed in corporate sector. Shareholders are not only the stakeholders but the society at large is also stakeholders. Society is passing through number of crises as lots of scams took place this year, the reaction of society is very important towards this. We should do whatever is right for the entire community. After the presentations lots of questions were asked by the audiences which were suitably replied by the speakers. The relevance of inner consciousness in the present business model has been realized. He named few of the scams and mentioned why these frauds have been committed. It was realized that laws and regulations are one part and with the best regulations worst scams took place. Second part is value based ethical part which is in consciousness. Any business has two distinct parts viz one spiritual part and cultural aspect of the business. The culture of the organization is very important as these are accumulated

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values. Structural part is also important but cultural part supersedes the structural part. If one follows the inner consciousness there would be less number of frauds. At the end, he said that school curriculum should also be changed by adding the value based education in the system. Only a change in our consciousness will change attitudes, values and can bring about a lasting solution. He quoted the names of few personalities who are pioneered in ethical education. A new concept which is gaining popularity among business leaders is triple bottom line viz PEOPLE PLANET AND PROFIT. Consciousness is now as valuable to business as mundane assets like capital, energy or even technology. Business environment has gone through a process of natural evolution from the physical economic, social emotional to the mental-moral paradigm, the next step to be spiritual paradigm. The integral vision for the individual as well as the collective dimension and also how the concept of integral vision can be implemented. Consciousness it not just relevant to business today, it has been relevant through the ages. It is relevant to all aspects of human endeavours. There are few loopholes in laws viz the provisions of appointment of independent directors about the applicability of corporate governance in case of non listed companies etc. He said that ethics cannot be an afterthought, brought through regulations. Every society has to work within laws. After the presentations lots of questions were asked by the audience which was suitably replied by the speakers. It is a great thing to create right environment. How many people can reach to the position that will enable them to create the right environment? Instead of creating right environment one must see within himself or herself. one must take steps to change oneself first. What changed his attitude towards professional life with the participants? We have our values but sometimes the environment is such that it overtakes the values. The education from the primary to professional and also the continuing education must focus on the inner consciousness and on strengthening the character. The school curriculum must focus on the morals and the values, the college levels must include the teaching of the business ethics and at the professional level the teaching of how these

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values and ethics can be converted into best management practices is very much essential. If this will be educational system then the Corporate Governance practices followed by these young generation will be far better than the earlier. The value based system is much larger connotation; it includes the anti competitive behavior.

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