M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

Cadbury Committee
A committee was set up under the chairmanship of ADRAIN
CADBURY in May 1991 by the financial reporting council, the London
stock exchange and the accountancy professional to look into the financial
aspect of corporate governance. The committee first submitted its report for
public scrutiny on 27 May,1992.

The recommendation made by the Cadbury Committee are as

follows:-

 Decision making power should not be vested in single person, i.e

there should be a separation of the roles of the chairman and the chief
executives.
 Non- executive directors should act independently while giving their
judgment on issues of the strategy, performance, allocation of
resources and designing codes conduct.
 A majority of directors should be independents non- executive
directors i.e they should not have any financial interest in the
company.
 The terms of directors should not exceeds three years. This can be
extended only with the prior approvals of the shareholders.
 There should be full transparency in matter relating to directors
emolument. There should be judicious mix of salary and performance
related pay.
 A remuneration committee made up wholly or largely to non-
executive directors should decide on the pay of the executive
directors.
 The interim company report should give the balance sheet
information and should be reviewed by the auditor.
 The pension funds should be managed distinct from the company.
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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

 There should be a “profession and objective” relationship between

the board and the executives.
 Information regarding the audit fee should be made public and there
should be regular rotation of auditors.

The recommendation made by the Cadbury Committee were widely

accepted by the corporate in U.K and they became a reference for many
other committees, which were up.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

Comments:-
The TATA ELXSI Ltd complies with all the Cadbury Committee
Recommendations’.

The company has separate powers for the chairman & executive &
non executive directors.There are one executive director and five non
executive director. The chairman takes voting from its members for taking
any major decision. The non executive director takes the decision in the
best interest of the company.

The majority of Board of Director are independent,i.e.,5. The

Company provides all the relevant information about the company in a
transparent manner which means they provide all the information. There
are one non executive chairman who is also promoter of the company.

The tenure of board of director is 3 years & it can be increased by

proper approval from its stakeholders. The balance sheet is approved by
the auditors.

The board of directors meeting was held 4 times in the past year
which is good for the development of the company.

The company keeps a healthy & friendly environment in its working

so keep the employees happy & satisfied.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

Kumar Mangalam Birla Committee Report

Kumar Mangalam Birla Committee appointed by the Securities
Exchange Board Of India (SEBI) on May7, 1999. The committee was formed
to promote and raise the standards of corporate governance.

Some of the recommendation made by Kumar Mangalam Birla

Committee are as follow:-

1. The board should have an optimum combination of executives and

non- executive’s directors and at least 50% of the board should
comprise of independent directors where chairman is non-executive
and at least half of the board should be independent in case of an
executive chairman.
2. A qualified and an independent “audit committee” should be set by
the board of the company. This would go a long way in enhancing
the creditability of the financial disclosure of a company and
promoting transparency.
3. The board should set up a “remuneration committee” it determine on
their behalf and on the behalf of the shareholder with agreed terms of
reference, the company’s policy on specific remuneration packages
for executive directors including pension right and compensation
payment.
4. The board should set up a committee under the chairmanship of a
non- executive / independent director to specifically into
shareholders issues including share transfer and redressed of
shareholder complaint.
5. To expedite the process of the share transfer, the board should
delegate the power of the share transfer to an officer or a committee

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

or to the registrar and share transfer agents. The delegated authority

should attend to share transfer formalities at least once in a fortnight.
6. The corporate governance section of the annual report should make
disclosures on remuneration paid to director in all forms including
salary, benefits, bonuses, stock option, pension and other fixed as
well as performance linked incentives paid to the directors.
7. The board meeting should be at least four time in a year, with a
maximum gap of four month between any two meetings and all
information recommended by SEBI committee should be placed
before the board.
8. As part of disclosure related to management, in addition to the
director’s report, management discussion and analysis report should
part of the annual report to the shareholder.
9. All the company related information like quarterly result,
presentation made by the companies to analysts may be put on
company’s websites or may be sent in such form so as to enable the
stock exchange on which the company is listed to put it on its own
websites.
10. There should be separate section on corporate governance in the
annual report, with details on the level of compliance by the
company. Non- compliance of mandatory recommendation with
reason thereof and the extent to which the non- mandatory
recommendation have been adopted should be specifically
highlighted.
11. No director should be a member in more than 10 committee or act as
chairman of more than five committees across all companies in which
he is director. Furthermore, it should be a mandatory annual
requirement for every director to inform the company about the
committees position he occupies in other companies and changes

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

12. The company should provide a brief resume, expertise in specific

functional areas+ and names of the companies, in which the person
also holds the directorship and the membership of committees of the
board, while appointing a new director or re- appointing an existing
director. There should form part of the notice to shareholders.
13. Disclosures to be made to the board by the management relating to
all material, financial and commercial transaction, where they have
personal interest that may have a potential conflict with the interest
of the large. These include dealing in company shares, commercial
dealing with bodies, which have shareholdings of management and
their relatives, etc.
14. The half yearly declaration of financial performance including
summary of the significant events in last six months, should be sent
to each households of shareholders.
15. The financial institutions should under normal circumstances have
no direct role in the decision- making of the board of the company.
They should not have nominees on the board, merely by virtue of the
financial exposure in the company. There is, however, a ground for
the term lending financial institution to have nominees on the boards
of the borrowers companies, to protect their interest as creditors. In
such cases, the nominees directors should take an active interest in
the activates of the board and assume equal responsibility, as any
other director on the board.
16. A separate section on compliance with the mandatory
recommendation of clause 49 should form part and details of non-
compliance should be highlighted
17. A certificate from the auditors on compliance should form part of the
annual report and annual report and a copy has to be sent to the
stock exchanges.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

Comments
The TATA ELXSI Ltd, complies with most of the recommendation of
the Kumar Mangalam Committee Report.

The company has 5 non executive directors out of 6 directors. The board
complying with 60% directorship which is above average . The audit
committee setup by the company is an independent entity & provides the
company’s financial details in a transparent & fair manner & enhancing the
creditability of the company & helps in building a good corporate imagein
the minds of the people.

The company has also set up remuneration committee which decides the
salary of the board of directors & its employees. The meeting was held on
27th April 2009.

Thay have setup a different share transfer agent & registrar of share

The company holded 6 board meetings during the financial year & the gap
between the meetings did not exceed 4 months. The company also provides
their financial reports on a quarterly & half yearly basis on their websites .

The companies also have a separate section of Corporate Governance

report in its financial report.

The company also provides all the detail about the attendance of the
different board of directors & their salary.

The company complies fully with the clause 49 of the SEBI listing
agreement.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

N.R Narayan Murthy Committee

With the belief that the efforts to improve corporate governance
standards in India must continue because these standards themselves were
evolving in keeping with the market dynamics, the Securities and
Exchange Board of India (SEBI) had constituted a Committee on Corporate
Governance in 2002 , in order to evaluate the adequacy of existing
corporate governance practices and further improve these practices. It was
set up to review Clause 49, and suggest measures to improve corporate
governance standards.

The SEBI Committee was constituted under the Chairmanship of Shri

N. R. Narayana Murthy, Chairman and Chief Mentor of Infosys
Technologies Limited. The Committee comprised members from various
walks of public and professional life. This included captains of industry,
academicians, public accountants and people from financial press and
industry forums.

The terms of reference of the committee were to:

 review the performance of corporate governance; and

 determine the role of companies in responding to rumour and other
price sensitive information circulating in the market, in order to
enhance the transparency and integrity of the market.

The issues discussed by the committee primarily related to audit

committees, audit reports, independent directors, related parties, risk
management, directorships and director compensation, codes of conduct
and financial disclosures.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

The committee's recommendations in the final report were selected

based on parameters including their relative importance, fairness,
accountability, transparency, ease of implementation, verifiability and
enforceability.

The key mandatory recommendations focused on:

 strengthening the responsibilities of audit committees;

 improving the quality of financial disclosures, including those related
to related party transactions and proceeds from initial public
offerings;
 requiring corporate executive boards to assess and disclose business
risks in the annual reports of companies;
 introducing responsibilities on boards to adopt formal codes of
conduct; the position of nominee directors; and
 stock holder approval and improved disclosures relating to
compensation paid to non-executive directors.

Non-mandatory recommendations included:

 moving to a regime where corporate financial statements are not

qualified;
 instituting a system of training of board members; and
 evaluation of performance of board members.

As per the committee, these recommendations codify certain

standards of 'good governance' into specific requirements, since certain
corporate responsibilities are too important to be left to loose concepts of
fiduciary responsibility. Their implementation through SEBI's regulatory
framework will strengthen existing governance practices and also provide
a strong incentive to avoid corporate failures.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

The Committee noted that the recommendations contained in their

report can be implemented by means of an amendment to the Listing
Agreement, with changes made to the existing clause 49.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

Comments
The TATA ELXSI LTD company also fully complies with the Narayan
Murthy Committee recommendation.

The company also provides some training to their employee & staff worker
to increase their ability & work efficiency.

They also focus on giving more importance to the interest of the

stakeholders. The company also provides all the relevant detail regarding
their management discussion & analysis is attached to the Director’s report.

The company also provides financial disclosures, including those related to

related party transactions and proceeds from initial public offerings.

The company also takes approval from stakeholders in deciding how much
salary should be given to the non – executive directors.

The main aim or focus of the committee was to strengthening the certain
standards of 'good governance' & helping to build confidence among the
stakeholders & customers mind.

It has setup certain consumer complaints forum to address their complaints

ality& they also take some suggestion from the public in appraising their
product quality

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

CII Report
Confederation Of Indian Industry (CII) took the initiatives to draft
some codes of corporate governance. CII was set up in mid 1996 under the
leadership of Mr.Rahul. Baja, ex president, CII, and CMD, Bajaj Auto Ltd.

Objectives:-

 Primary goal of CII is to develop Indian Industry and to ensure that

government and society as whole, understand both the needs of
industry and its contribution to the nation and well- beings. The
objective of CII are as follow:-

 To identify and strengthen industry’s role in the economic

development of the Indian Industry.

 To act as a catalyst in bringing about the growth and development of

Indian Industry.

 To reinforce Industry’s commitment to the society.

 To provide up to date information and data to industry and

government.

 To create awareness and support industry’s effort on quality

environment, energy management, and consumer protection.

 To identify and address the special needs of the small sector to make
it more competitive.

 To promote cooperation with counterparty organization.

 To work towards the globalization of Indian Industry and integration

into the world economy.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

This is done by adopting a proactive and partnership approach with

the government on various national and international issues concerning the
Indian economy. It closely interact on the policy issues at both the central
and the state level. Extensive dialogue and interaction with members and
all section of the community to build consensus are held.

Some of the recommendation made by the CII committee on

corporate governance is given below:-

1. The full board should meet a minimum of six times a year, preferably
at an interval of two months, and each meeting should have agenda
items that require at least half day’s discussion.

2. Any listed company with a turnover of Rs.100/- crore and higher

should have professionally competent, independent, non- executive
directors, who should constitute at least 30% of the board if the
chairman of the company is a non- executive directors, or at least
50% of the board if the chairman and managing directors is the same
person.

3. No single person should hold directorship in more than 10

companies. This ceiling excludes directorship in subsidiaries (where
the group has over 25% but no more than 50% equity stake).

4. For non- executive director to play a material role in corporate

decision- making and maximization long- term shareholder value,
they need to become active participant on the board, not passive
advisors; have clearly defined responsibilities within the bard such as
audit committee; and know how to read a balance sheet, profit and
loss accounts, cash flows statement and financial ratio and have some
knowledge of various company law. This, of course, exclude those

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

who are invited to join boards as expert in other fields such as science
and technology.

5. To secure better effort from non- executive directors, companies

should pay a commission over and above the sitting fees for the use
of professional inputs. The present commission of 1% of net profit (if
the company has a managing director) is sufficient; consider offering
stock options, so as to relate reward to performance commission
reward on current profit. Stock option are reward contingent upon
future appreciation of corporate value. An appropriate mix of the
two can align a non- executive directors towards keeping an eye on
short term profit as well as long term shareholder value.

6. While re-appointing members of the boards, companies should give

the attendance record of the concerned directors. If the director’s has
not been present (absent with or without leave) for 50% or more
meetings, then this should be explicitly stated in the resolution that is
put to vote. As a general practice, one should not re-appoint any
director who has not had the time to attend even one half of the
meetings.

Key information that must be reported and placed before the board
must contain:

 Annual operating plans and budgets, together with update long term
plan.

 Capital budgets, manpower and overhead budgets.

 Quarterly result for the company as a whole and its operating

division or business segments.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

 Internal audit reports, including cases of theft and disorder of a

material nature.

 Show cause, demand and prosecution notice report revenue

authorities that are considered important (material nature of any
exposure that exceeds 1% of the company’s net worth).

 Fatal or serious accident, dangerous occurrence, and any effluent or

pollution problems.

 Default in payment of interest or non- payment of the principal on

any public deposit, and/ or to any secured creditor or financial
institution.

 Default such as non- payment of inter- corporate deposit by or to the

company, or materially substantial non- payment for goods sold by
the company.

 Any issues which involves possible or public product liability claim

of a substantial nature, including any judgment or order which may
have either passed structures on the conduct of the company, or
taken as adverse view regarding another enterprise that can have
negative implication for the company.

 Details of any joint venture or collaboration agreement.

 Transaction that involves substantial payment towards goodwill,

brand equity, r intellectual property.

 Recruitment and remuneration of senior officer just below the board

level, including appointment or removal of the chief financial officer
and the company secretary.

 Labor problems and their proposed solution.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

 Quarterly details of foreign exchange exposure and the steps taken

by the management to limit the risk of adverse exchange rate
movement, if material.

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M. D. COLLEGE CORPORATE GOVERNANCE T. Y. F. M.

Comments
The company complies with all the recommendations of the CII committee
recommendations.

The company has taken certain initiatives in building a good corporate

image & has taken certain initiatives for social responsibilities.

They also provides all the relevant details about the financial position &
their collaborations.

Name Salary Meetings

Attended
S. Ramadorai 6/6

H.H. Malgham 6/6

P.G. Mankad 5/6
P.McGoldrick 5/6
R. Natarajan 6/6
Madhukar Dev 6/6

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