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Kumar Mangalam Birla Committee Report & Recommendations

The Kumar Mangalam Birla Committee was formed to review corporate governance practices from an investor perspective and develop a code of best practices. The Committee made 25 recommendations, 19 of which were mandatory. The key recommendations included having an independent board with at least 50% independent directors, establishing audit and remuneration committees, and increasing disclosure standards around director compensation. The goal was to promote high standards of governance and protect shareholder interests.

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230 views7 pages

Kumar Mangalam Birla Committee Report & Recommendations

The Kumar Mangalam Birla Committee was formed to review corporate governance practices from an investor perspective and develop a code of best practices. The Committee made 25 recommendations, 19 of which were mandatory. The key recommendations included having an independent board with at least 50% independent directors, establishing audit and remuneration committees, and increasing disclosure standards around director compensation. The goal was to promote high standards of governance and protect shareholder interests.

Uploaded by

ksonali
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Kumar Mangalam Birla Committee

Report & Recommendations


To view corporate governance from the point of
view of investors and shareholders, to prepare a
code to suit the corporate environment.
Outcome
• The Committee made 25 recommendations,
19 of them were `mandatory
• To promote and raise the standards of
corporate governance.
• Aplies to listed companies of paid up capital of
Rs. 3 crores .
Recommendations
• Composition of Board of Directors
 Distinction between non-executive directors, independent and
non-independent ones.

 Independence: Independent directors have only the income


from the director’s remuneration. They do not have any other
relationship with company or its promoters, management or
its subsidiaries.
 All pecuniary relationships of non-executive directors be
disclosed in the annual report
Recommendations Contd…
• Independent and non-independent directors should help
bring an independent judge to bear on boards deliberations
especially on issues of strategy, performance, management of
conflicts and standards of conduct.
• Optimum combination of independent and non-independent
board of directors, not less than 50 percent independent.
• Incase of Non-executive chairman- 1/3rd board have
independent directors
• Executive chairman: Half the board be independent
Contd…
• Non executive chairman- Entitled to maintain chairman’s
office at company’s expense

• Reimbursement of expenses incurred in performing duties, to


discharge functions effectively

• This is a non mandatory recommendation


Contd..
• Audit Committee- With 3 independent directors, with 1
having financial and accounting knowledge.

• Remuneration committee – Disclosure in annual report


relating to all elements of remuneration package of directors
like salary, bonus, ESOPs, pension, benefits etc.
Remarks
• By and large, Indian listed companies have been legally
mandated to follow fairly strict standards of corporate
governance and disclosure.
• Indian corporate sector regulators and companies have been
quick to incorporate some of the best international corporate
governance and disclosure practices

• The need of the day is more training… of directors, audit


committee members and senior executives of companies
• The challenge is to design and sustain a system that imbibes
the spirit of corporate governance… and not merely the letter
of the law

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