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Corporate Governance and Business Ethics in India

Dr. Iti Bose Research Associate Shailesh Jha Mehta School of Management Indian Institute of Technology, Mumbai, India itibose@iitb.ac.in

Abstract
With the growing strength of consumer movements and rising levels of awareness among stakeholders, corporations are realizing that stakeholders and consumers are no longer indifferent to unethical practices like financial irregularities, tax-evasion, poor quality products and services, kick-backs, non-compliance with environmental issues, and hazardous working conditions.

Many Indian companies too have recognized the importance of integrity, transparency, and open communications. They believe that the goodwill resulting from adopting and successfully implementing a code of business ethics will, in the long run, translate into economic gains.

properly, but also have proper corporatethatbusiness ethics and an ethicalmanaged Today, difference between the companies they invest in are not only business? 1.3 What is the investors want to ensure governance. They regard corporate governance with the corporate governance related provisions of Clause 49 of the Listing Agreement

as a control mechanism that ensures the optimum use of the human, physical and financial resources of an enterprise.

Companies have now begun to integrate ethics into their corporate cultures and concentrate on putting appropriate corporate governance mechanisms in place.

Key Words: Corporate Governance, Corporate Law, Business Ethics, Governance Systems, Cross-cultural management, Asian business, Stakeholder theory, Agency theory, Corporate social responsibility

properly, but also have proper corporate governance. They regard corporate governance

1. Introduction

Corporate governance is a matter of conviction in the dogma of sharing of wealth with various participants in corporate enterprises. Strong Corporate Governance is indispensable to a resilient and vibrant corporate market and is an important instrument of investor protection. It is the blood that fills the veins of transparent corporate disclosure and high quality accounting practices. The essence of corporate governance involves the development of a constructive relationship between different constituents of a corporate enterprise based on the principles of fairness, transparency and accountability. Such a mechanism enables corporations to attract monetary and human resources, enables Board to monitor the performance of the management, crucial for the assigned role of running the enterprise for the common benefit of all constituents. Economic resources would flow only to corporations having impeccable corporate governance credentials. For the developing economies seeking to integrate with the global economy, corporate governance is of critical importance, as it is the key parameter used for evaluation by global investors or strategic partner.

The fall of many US corporations in the early years of the 21st century brought one clear message to the fore: ethics matters in business. The public s perception of corporate ethics changed dramatically with the revelation of the unethical decision-making at WorldCom and Enron. The scandals took a toll on consumers confidence and portfolios, and undermined their faith in the accounting profession. Corporate stakeholders have called for more transparent financial reporting and evidence of better ethical conduct. SEC Chairman William H. Donaldson has said that restoring the publics confidence in the

accounting profession was the Sarbanes-Oxley Acts (SOA) primary goal. Part of restoring the publics confidence entails auditors and audited adopting best practices, including transparency.

Fairness, transparency, responsibility, and accountability are the core values of corporate Governance they are also core principles of democracy. Originally defined as a concept that deals with issues of separation of ownership and control, corporate governance evolved into a concept that deals with a variety of crucial issues such as the enforcement of property rights, the protection of minority shareholders rights, the enforcement of contracts, the creation of a functioning banking system, and the prevention of assets tripping and selfdealing in the privatization process.

Effective governance means competent management of a country's resources in a way that is fair, open, accountable and responsive to people's needs. Good governance is the basic building block for development and is the largest of the aid program's sectors Support for good governance is not restricted to central governments, but must be adopted by service delivery areas of partner governments, local administrations, civil society and the private sector.

Good governance-sound policies, mature institutions and accountable systems- are a basic condition for stability and prosperity in all countries. Open, accountable and transparent institutions and sustainable policies help deliver security, respect for human

rights and economic development. In an increasingly globalised world economy, those nations able to sustain high standards of governance will succeed, while others will struggle.

(The concept of corporate governance is entering a phase of global convergence. The driver behind this is the recognition that companies need to attract and protect all stakeholders, especially investors both domestic and foreign. Global capital seeks its own equilibrium and naturally flows to where it is best protected and bypasses where protection is limited or non-existent. Companies stand to gain by adopting systems that bolster investor trust through transparency, accountability and fairness).

1.1 Why Corporate Governance?

In the process of implementing corporate governance practices, the private sector begins practicing the fundamentals of democracy and builds safeguards against corrupt practices on the part of both the business community and the government. At its core, corporate governance deals with issues that result from the separation of ownership and control Frequently, the decision to invest in a particular profit-making firm is made from a distance by investors who are removed from the day- to- day operations of the company But corporate governance goes beyond simply establishing a transparent and responsible relationship between managers and owners. The presence of strong corporate governance standards provides increased access to capital and thus aids economic development. For the

past several decades, hardly any development efforts were successful without foreign

1.3 What is the difference between business ethics and an ethical business?

investment. Good corporate governance attracts investors by assuring them that the business environment is fair and transparent; that companies can be held accountable for their actions or inactions; and that investments can be protected and contracts enforced.

It is obvious that corporate governance is important for investors because it creates bettermanaged companies. Yet corporate governance is equally important for society, because the day-to-day practice of corporate governance standards requires that companies support the rule of law and efficient courts that uphold property rights. It requires that financial records be independently audited and that avenues of corruption be exposed. It requires that shareholders be given information so that they can make informed decisions. As corporate failures inevitably have negative effects on the society and governments, good corporate governance is in the best interest of all parties.

1.2 What is business ethics?

A Business ethics is the application of ethical values to business behaviour. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, discretionary. Business ethics applies to the conduct of individuals and to the conduct of the organisation as a whole. It is about how a company does its business, how it behaves intrinsically.

Business ethics relates to how any company conducts its business in order to make profit. Any company can seek to do business ethically. An ethical business, on the other hand, has a much broader agenda and focuses on making a positive contribution to the community. A mainstream bank, for example, may take ethics seriously by taking responsibility for its negative impacts on society and the environment and seeking to minimise those impacts. An ethical bank, such as The Co-operative Bank, states that it seeks to make the world a better place by taking a different approach to banking. In the case of this type of business, ethics becomes at least as high a priority as profitability.

2. India- A Case Study

In its constant endeavour to improve the standards of corporate governance in India in line "with the needs of a dynamic market," the Securities and Exchange Board of India (SEBI) [1] recently approved certain amendments in the Listing Agreement[2] concerning corporate governance. The capital market regulator, from time to time, came out with several regulations on corporate governance. Now the SEBI has come out with a new set of regulations for corporate governance.

The regulator is trying to ensure that the interest of all shareholders is taken into account and also the management does not violate any of the laws of the land. That is why the SEBI has increased the number of independent directors on the board and made them accountable. For instance, the audit committee of a company, with the implementation of 1.3 What is the difference between business ethics and an ethical business?

SEBI's new norms, comprised only independent directors and these independent directors

were expected to check all details of accounts, see that proper systems were followed and they were supposed to quarry the auditors on various issues without having the management around.

Corporate governance is meant to run companies ethically in a manner such that all stakeholders - creditors, distributors customers, employees, society at large and Governments are dealt in a fair manner. There was a belief at one time that the job of the management is to look after its shareholders alone. Now the whole concept of capitalism has changed and it has started adopting a much broader view for its own survival that is why it has now become important that governance should look at all stakeholders and not just shareholders.

Corporate governance is not something, which regulators have to impose on a management but it should come from within. There is no point in making statutory provisions for enforcing ethical conduct. It is not that there is no broad regulatory framework in position now. There are lot of provisions in the Companies Act [3]. For example, disclosing the interest of directors in contracts in which they are interested and abstaining from exercising voting rights in matters they are interested, statutory protection to statutory auditors who is supposed to go into the details of the financial management of the company and report the same to the shareholders of the company.

One important point here to note that these are in fact not guiding principles but out and out regulations. The SEBI has jurisdiction only in limited companies and they are concerned about protecting the interest of the shareholders. But the benefit of good corporate governance should reach not only the shareholders of the listed companies but

also the shareholders of other public limited companies and further the interest of the creditors, labourers, and consumers are also to be protected through proper governance. In view of this, instead of making a segmented approach in SEBI regulation it would be more appropriate to have a centralised approach which would take care of the interest of all those interested in the good governance of companies, shareholders, creditors, employees, and consumers.

India, with its 20 million shareholders, is one of the largest emerging markets in terms of the market capitalization. In order to protect the large investor base, the Securities and Exchange Board of India (SEBI) has enforced a regulation effective from April 2001, requiring mandatory disclosure of information and a change in the corporate governance mechanisms of the listed companies. This study empirically examines the economic impact of the Regulation on the stock market variables. The experimental group exhibits significant reduction in their beta consistent to the notion that increased information and better corporate governance mechanism reduces the risk of these companies.

Good governance goes beyond disclosures

In 1 996,Confederation of Indian Industry (CII)[4] took a special initiative on Corporate Governance the first institutional initiative in Indian industry. The objective was to develop and promote a code for Corporate Governance to be adopted and followed by Indian companies, be these in the Private Sector, the Public Sector, Banks or Financial Institutions, all of which are corporate entities.

This initiative by CII flowed from public concerns regarding the protection of investor interest, especially the small investor; the promotion of transparency within business and industry; the need to move towards international standards in terms of disclosure of information by the corporate sector and, through all of this, to develop a high level of public confidence in business and industry.

A National Task Force set up with Mr. Rahul Bajaj, Past President, CII. This Task Force presented the draft guidelines and the code of Corporate Governance in April 1997 at the National Conference and Annual Session of CII. This draft was then publicly debated in workshops and Seminars and a number of suggestions were received for the consideration of the Task Force. Reviewing, these suggestions, and the development, which have taken, place in India and abroad over the past year, the Task Force has finalised the Desirable Corporate Governance Code. CII has the pleasure in presenting this Code in this document for information, for understanding and for implementation of Indian business and industry.

Since 1974, CII has tried to chart new path in terms of the role of an Industry Association such as itself. It has gone beyond dealing with the traditional work of interacting with Government of policies & procedures, which impact on industry. CII has taken initiatives in Quality, Environment, Energy, Trade Fairs, Social Development, International Partnership Building, etc. as part of its process of development and expanding contribution to issues of relevance and concern to industry.

This Code of Corporate Governance continues this process and takes it one step further. Fortunately there is very little difference between the draft Code released in April 1997 and

the final Code. It reflects the comprehensiveness of the Task Force s work and the thought, which has gone into preparing this Code. Its is pioneering work, it is path breaking initiative and we are delighted to release the Code in the hope that the corporate sector will implement it seriously and sincerely.

I n d i a s corp orate govern an ce framew ork

India is now implementing important corporate governance reforms that position the country s corporate governance framework as above average compared to other emerging market economies. However, as is the case with many other countries weaknesses remain in enforcement of rules and regulations. Edward Baker, Chief Investment Officer of Global Emerging Markets, Alliance Capital Management, and Chairman of the Equity Advisory Group (EAG) of the IIF, said: Our report is being published as new Indian regulations are coming into effect with the aim of significantly strengthening the system of corporate governance. The Securities and Exchange Board of India (SEBI), the independent capital markets regulator, has made significant efforts to keep up with changing corporate governance practices in leading equity markets around the world, namely the United Kingdom and the United States. We welcome the actions that the Indian authorities are pursuing.

IIF Managing Director Charles Dallara said, It is important that Indian corporate governance standards continue to improve as the country becomes an increasingly important participant in global trade and finance. It is encouraging that, as our new report

points out, companies such as Infosys Technologies, the Tata Group, ICICI Bank and the Housing Development Finance Corporation Ltd. (HDFC), are developing sound corporate governance approaches. These can serve as models for the thousands of listed Indian companies that have yet to put in place governance systems that meet the requirements set by the Indian authorities and that can enhance international investor confidence. The IIF is the global association of financial institutions comprising more than 340 member institutions headquartered in over 60 countries operating across the world. In preparing the report the Task Force held meetings in Mumbai and New Delhi with senior officials from the government, the Reserve Bank of India, the Securities and Exchange Board of India (SEBI), the Bombay Stock Exchange (B SE), the National Stock Exchange of India (NSE), private companies, rating agencies, law firms and consultancies involved in corporate governance.

India has 22 stock exchanges and approximately 6,000 publicly listed companies with a total market capitalization of India s stock markets of around US$546bn, as of December 30, 2005. Over 40 million people invest in shares and mutual funds in the country. The ten largest companies account for more than one-third of total market capitalization Indian companies have been increasingly attracting foreign capital either through listing on international stock exchanges or through private equity placements and foreign institutional investments. Companies that wish to access markets for capital or that wish to become leading global suppliers to corporations in developed markets are becoming increasingly transparent and are more willing to adopt higher corporate governance standards. The EAG India Task Force found that in such key areas as minority shareholder protection and accounting/auditing, India s corporate governance framework is consistent with most

of the IIF s guidelines. In October 2004, SEBI revised existing corporate governance requirements to incorporate selected features of the Sarbanes-Oxley Act Indian companies are required to be in compliance with these new provisions, introduced in Clause 49 of SEBI s listing agreement, by December 31, 2005. Clause 49 requires companies to file a quarterly compliance report with the stock exchange.

The stock exchange in turn is required to file an annual compliance report with SEBI for each listed company. Quarterly reports due on March 31, 2006 will begin carrying compliance information with the new governance listing requirements.

A report pointed out that, neither the stock exchanges nor SEBI have increased staff as needed to effectively scrutinize compliance with Clause 49 and other rules and regulations. The EAG Task Force said, SEBI personnel need adequate training to develop skills required to build strong cases against errant companies. Moreover, the report stated that the cost of non-compliance to companies in the form of fines, legal action and de-listing is low and has proved to be an ineffective mechanism to deal with errant companies.

The report noted that an overhaul of the Indian Companies Act of 1956 (amended in 2002) is likely in the near future, which is designed to simplify procedures and introduce a system based on rules to be prescribed by authorities. However, it is uncertain at this time which authority will prescribe the rules. Nevertheless, if the bill passes, the voluminous provisions in the current act would be reduced by two-thirds from the present roughly 780 provisions.

The report noted a lack of shareholder activism. It added that pension reforms are required to create a class of Indian institutional investors who will further the cause of minority shareholders and help strengthen corporate governance in Indian companies. To some degree, the Indian press is seen as substituting for shareholder activism.

On balance, Indias corporate governance policy framework is above average and moving in the right direction, though weak surveillance and enforcement practices slow down the pace of improvements. The Task Force believes that further improvements in Indian corporate governance practices require the following actions:

Encourage better compliance with listing requirements by increasing the cost of non-compliance Strengthen surveillance mechanisms Introduce sector-specific corporate governance best practices Increase shareholder activism in the country by undertaking pension reforms Pursue legal reforms to provide investors with a mechanism by which they can redress grievances in a timely and cost-effective manner Securities And Exchange Board Of India SEBI

SEBI established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development & regulation of the market. The regulatory body for the investment market in India. The purpose of this board is to maintain stable and efficient markets by creating and enforcing regulations in the market place The Securities and Exchange Board of India is similar to the U.S. SEC. The SEBI is

relatively new (1992) but is a vital component in improving the quality of the financial markets in India both to attract foreign investors and to protect Indian investors

With a view to encouraging wider participation of all classes of investors, including retail, across the country in government securities, the Government, the Reserve Bank of India (RBI), and the Securities and Exchange Board of India (SEBI) propose to introduce trading in government securities through a nation wide, anonymous, order driven, screen based trading system of the stock exchanges, in the same manner in which trading takes place in equities. This facility will be in addition to the present system of dealing in government securities through the Negotiated Dealing System of the RBI.

Besides expanding the investor base and providing country wide access to the government securities market, this measure will also help in reducing time and cost in trade execution by matching orders on a strict price time priority. It is also expected to enhance the operational and informational efficiency of the market as well as its transparency, depth and liquidity. This paper develops an implementable market design for trading of government securities on exchanges.

2.1 Company Law and Accounting

The principal forms of business organization in India are: Companies -- both public and private.

Partnerships

Sole proprietorships

Apart from statutory government-owned concerns, the most prevalent form of large business enterprise is a company incorporated with limited liability. Although companies limited by guarantee and unlimited companies are permitted by law, they are relatively uncommon. Companies incorporated in India and branches of foreign corporations are regulated by the Companies Act, 1956 ("the Act"). The Act, which has been enacted to oversee the functioning of companies in India, draws heavily from the United Kingdom's Companies Act..

The Securities Reserve bank Contracts Banking of India Act (Regulation) Regulation Act of 1949 Indian of 1934 Act, 1956 Companies Act of Indian Company Acts 1956 Indian Companies Act of 1866 Indian Companies Act of 1882 Indian Companies Act of 1913

Industrie s (Develo pment & Regulati ons) Act, 1951, (IDRA)

T h e M o n o p

o l i e s a n d R e s t r i c t i v e T r a d e P r a c t i c e s A c t , 1

9 6 9 , ( M R T P )

The Act requires every Indian company to

keep books of accounts and statutory registers and other books, which give a true and fair view of the state of the company's affairs. The Board of Directors of every company is

required to present the company's statements financial to the

shareholders at every Annual General

Meeting.

Every

company has to appoint a recognized auditor to audit its accounts and statutory registers.

The Act defines a "company" as a company incorporated under the Act. Indian law however, makes a distinction between a Corporate Body and a Company. A "Corporate Body" is defined to include a foreign company, i.e., a company incorporated outside India. A company can be a public or a private company and could have limited or unlimited liability. A company can be limited by shares or by guarantee. In the former, the personal liability of members is limited to the amount unpaid on their shares, while, in the latter, the personal liability is limited by a pre-decided nominated amount. For a company with unlimited liability, the liability of its members is unlimited.

The following are the basic kinds of companies, which come under the purview of the Act:

- Private companies - Public companies - Foreign companies - Holding and subsidiary companies (could be a private or a public limited company)

P r i v a t e C o m p an i e s

A private company incorporated under the Act has the following characteristics:

- the right to transfer shares is restricted. - the maximum number of its shareholders is limited to 50 (excluding employees). - no offer can be made to the public to subscribe to its shares and debentures.

Private companies are relatively less regulated than public companies. A private company is deemed to be a public company in the following situations:

- When 25 per cent or more of the private company's paid-up capital is held by one or more public company. - The private company holds 25 per cent or more of the paid-up share capital of a public company. - The private company accepts or renews deposits from the public. - The private company's average annual turnover exceeds Rs.100 million.

Pu b l i c C o m p an i e s

The Act defines a "public company" as one, which is not a private company. In other words, a public company is one on which the above restrictions do not apply.

F o r e i g n C o m p an i e s

Foreign companies are those, which have been incorporated outside India and conduct business in India. These companies are required to comply with certain rules under the Act. As a result, liaison and project offices and branches of foreign companies in India are regulated by the Act. Such companies have to register themselves with the RoC[5], New Delhi within 30 days of setting up a place of business in India.

H ol d i n g an d S u b s i d i a r y C o m p an i e s

Under the Act, a holding company is merely supposed to publish certain information on its subsidiaries, and is not required to prepare group financial statements. However, the concept of a holding and subsidiary company is of importance in certain situations.

A private company that is a subsidiary of a public company loses most of its privileges and exemptions. A company is said to be a subsidiary of its holding company if any of the following conditions exist:

- The composition of its Board of Directors is controlled by the holding company. More than half of its voting power is controlled by the holding company. - It is a subsidiary of another subsidiary of the holding company.

2.2 CII Code on Corporate Governance (April 1998) In April 1998, India produced the first substantial code of best practice on corporate governance after the start of the Asian financial crisis in mid-1997. Titled "Desirable Corporate Governance: A Code", this document was written not by the government, but by the Confederation of Indian Industries (CII).

CII began working on this document prior to the financial crisis. It is one of the few codes in Asia that explicitly discusses domestic corporate governance problems and seeks to apply best-practice ideas to their solution. Most codes are abstract statements of principle with equally general recommendations, and say little about local conditions.

2.3 National Code on Corporate Governance (1999

In late 1999, a government-appointed committee under the leadership of Shri Kumar Mangalam Birla, Chairman, Aditya Birla Group, released a draft of India s first national code on corporate governance for listed companies. The committees recommendations, many of which were mandatory, were closely aligned to international best practices on corporate governance and set higher standards than most other parts of the region at that time. The code was approved by the Securities and Exchange Board of India (SEBI) in early 2000 and was implemented in stages over the following two years (applying first to newly listed and large companies). It also led to changes in the stock exchange listing rules.

2.4 Clause 49[6] (February 2000)

In February 2000, the Securities and Exchange Board of India (SEBI) revised its Listing Agreement to incorporate the recommendations of the countrys new code on corporate governance, produced in late 1999 by the Birla Committee. These rules contained in a new section, Clause 49, of the Listing Agreement took effect in phases over 2000-2003.

Clause 49 (2004) (SEBI):

Listed companies in India (with paid-up capital of Rs.3 crore and more) have to comply

of Stock Exchanges. Clause 49 has been prepared by the Securities and Exchange Board of India (SEBI)

2.5 Task Force on Corporate Excellence (November 2000

In May 2000, the Department of Company Affairs (DCA) formed a broad-based study group under the chairmanship of Dr. P.L. Sanjeev Reddy, Chairman, DCA. The group was given the ambitious task of examining ways to "operationalise the concept of corporate excellence on a sustained basis", so as to "sharpen India's global competitive edge and to further develop corporate culture in the country". In November 2000, a task force set up by the group produced a report containing a range of recommendations for raising governance standards among all companies in India. It also suggested the setting up of a Centre for Corporate Excellence. A copy of the report is attached. 2.6 Amending the company law (ongoing)

The Department of Company Affairs (DCA) has amended the Companies Act, 1956 several times in recent years to improve corporate governance and modernise Indias company law. In 1999, it introduced provisions relating to nomination facilities for shareholders , share buy-backs and the formation of an Investor Education and Protection Fund, among other things. Further amendments in 2000 covered postal ballots, audit committees, director responsibility statements, and an option for the election of a director by small shareholders.

with the corporate governance related provisions of Clause 49 of the Listing Agreement

Then in April 2002, DCA constituted a committee to take a fresh look at the Companies Bill, 1997 a comprehensive revision of the 1956 Act that had been pending in parliament for several years and suggest further changes. The committee, released its report in September 2002.

2.7 Chandra Committee on Auditing and Governance (2002)[7]

Following the collapse of Enron in 2001 and the passing of the Sarbanes-Oxley Act in July 2002, the Department of Company Affairs (DCA) formed a high-level committee in August 2002 to undertake a wide-ranging examination of corporate auditing and independent directors. Chaired by Shri Naresh Chandra, a former Cabinet secretary, the committee produced a report in late 2002 that made a series of strong recommendations regarding such things as the grounds for disqualifying auditors from assignments, the type of non-audit services that auditors should be prohibited from performing, the need for compulsory rotation of audit partners (but not firms), a stricter definition of "independent director" and the need for independent directors to make up no less than 50% of boards. While the committee was clearly influenced by Sarbanes-Oxley, it did not follow its dictates slavishly. An executive summary of the Chandra report is attached. For the full report, go to the DCA website and look under "Archive". 3. Conclusion

The set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed.

Corporate Governance is relatively new in India. Security Exchange Board of India is trying to implement Corporate Governance norms through governance norms. Today, more and more listed companies have begun to realise the need for transparency and good governance to attract foreign as well as domestic capital.

The Companies Act, 1956, has been in force now for nearly five decades. The present Companies Act, 1956, has been amended in the past, for more than 20 times. Ministry of Company Affairs (MCA) and the Confederation of Indian Industry (CII) in partnership with the Institute of Company Secretaries of India (IC SI) and the Institute of Chartered Accountants of India (ICAI) has set up the National Foundation for Corporate Governance (NFCG).

Following the corporate scandals of the US, the Department of Company Affairs (DCA), Government of India set up the Naresh Chandra Committee to examine various corporate governance issues. Many recommendations of the report were incorporated in the

Companies (Amendment) Bill 2003, which is currently being reviewed.

End Notes

1]SEBI, established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development & regulation of the market.

2]It has been decided to harmonise the level of public shareholding for continuous listing as contained in Clause 40A of the Listing Agreement and vis--vis other regulation / guideline such as the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and SEBI (Delisting of Securities) Guidelines, 2003.

3]PROVISIONS OF COMPANIES ACT 1956 (herein referred to as Act) WITH RESPECT TO CORPORATE
GOVERNANCE

4]The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes.

5]registrar of companies 6]In India specifically, the revised Clause 49 has proposed far reaching changes across the entire spectrum of governance activities including; Board composition and procedure / Audit committee responsibilities / Subsidiary companies oversight / Risk management / CEO/CFO certification of financial statements and / internal controls / Legal compliance monitoring; and /Other disclosures

7]The Department of Company Affairs (DCA)* has amended the Companies Act, 1956 several times in recent years to improve corporate governance and modernise Indias company law. In 1999, it introduced provisions relating to nomination facilities for shareholders while further amendments in 2000 covered

postal ballots and audit committees. A committee was set up in 2002 to take a fresh look at the Companies Bill, 1997 -- a comprehensive revision of the 1956 Act that had been pending in parliament for several years -- and suggest further changes. A report was submitted by the committee in September 2002.

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