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By : Mandar Borkar
Corporate Governance is the application of best management practices, compliance of law and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders. - The Institute of Company Secretaries of India
Following CIIs initiative, the Securities and Exchange Board of India (SEBI) set up a committee under Kumar Mangalam Birla to design a mandatory-cum-recommendatory code for listed companies The Birla Committee Report was approved by SEBI in December 2000. Following CII and SEBI, the Department of Company Affairs (DCA) modified the Companies Act, 1956 to incorporate specific corporate governance provisions regarding independent directors and audit committees
It would be necessary for chief executives and chief financial officers to establish and maintain internal controls and implement remediation and risk mitigation towards deficiencies in internal controls, among others. A company is also required to obtain a certificate either from auditors or practicing company secretaries regarding compliance of conditions as stipulated, and annex the same to the director's report. The clause mandates composition of an audit committee; one of the directors is required to be "financially literate". It is mandatory for all listed companies to comply with the clause by 31 December 2005.
Companys corporate governance philosophy is based on the following principles: Satisfy the spirit of the law and not just the letter of the law Corporate governance standards should go beyond the law Be transparent and maintain a high degree of disclosure levels. Make a clear distinction between personal conveniences and corporate resources. Communicate externally, in a truthful manner, about how the Company is run internally Comply with the laws in all the countries in which the Company operates. Have a simple and transparent corporate structure driven solely by business needs Management is the trustee of the shareholders' capital and not the owner
Infosys believes that an active, well-informed and independent Board is necessary to ensure the highest standards of corporate governance. The majority of the Board, eight out of 15, are independent members. Further, the Company has audit, compensation, investor grievance, nominations and risk management committees, which comprise independent directors. As a part of commitment to follow global best practices, company complies with the Euro shareholders Corporate Governance Guidelines 2000, and the recommendations of the Conference Board Commission on Public Trusts and Private Enterprises in the U.S.
As a good corporate governance practice, the Company has voluntarily undertaken an Audit by M/s Parikh & Associates, Practicing Company Secretaries, of the secretarial records and documents for the period under review in respect of compliance with the Companies Act, 1956, listing agreement with the Indian stock exchanges and the applicable regulations and guidelines issued by Securities and Exchange Board of India. The Company is in full compliance with the requirements of Corporate Governance under Clause 49 of the Listing Agreement with the Indian Stock Exchanges (the Listing Agreement). The Companys Depositary Programme is listed on the New York Stock Exchange. Risk management and internal control functions have been geared up to meet the progressive governance standards.
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