7/29/2019 BECG.l-10C.cg Committees (Contd)CII

1/6

1

CII Committee Report(Lesson-10C: BECG)

Prof. C. Anand

Faculty IBS, Hyderabad

7/29/2019 BECG.l-10C.cg Committees (Contd)CII

2/6

2

Contents

This deals with:-1. Origin

2. Recommendations of the Committee

7/29/2019 BECG.l-10C.cg Committees (Contd)CII

3/6

3

1. Origin

Confederation of Indian Industry (CII) tookinitiative to draft some CG codes. A nationaltask force on CG was set up in 1996 under theChairmanship of Rahul Bajaj, ex-President of

CII and CMD of Bajaj Auto Ltd. TheCommittees recommendations were wellreceived.

7/29/2019 BECG.l-10C.cg Committees (Contd)CII

4/6

4

2. Recommendations of the Committee

Following are the recommendations:-1. The full board should meet a minimum of 6 times a year,

preferably at an interval of 2 months.

2. A listed co. with turnover of Rs.100 crore and above shallhave professionally competent, independent non-

executive directors and constitute at least 30% of theboard if chairman is non-executive Chairman and atleast 50% if chairman and MD is the same person.

3. No single person shall hold directorships in more than 10

cos., excluding directorships in subsidiaries/associatecos., subject to some restrictions.

4. Non-EDs shall play a material role in decision makingand maximizing shareholder value.

7/29/2019 BECG.l-10C.cg Committees (Contd)CII

5/6

5

2. Recommendations of the Committee

5. For securing better effort from Non-EDs, cos. shall pay 1%

commission (1%-3%) on net profits for their professional

inputs.6. For reappointment of directors, their previous attendance

record (minimum of 50%) should be seen.

7. Key information that must be reported to Board must

include: Annual operating plans & budgets; capital, manpower and overhead budgets, qly results, IA reports,

show cause notices, fatal/serious accidents, defaults, joint

ventures, labor problems, forex exposures.

8. Audit Committees should be set up within 2 months forcos. with turnover of Rs.100 crore and paid-up capital of

Rs.20 cr or more. Listed cos. must give information on

high, low and monthly average share prices in a major

stock exchanges.

7/29/2019 BECG.l-10C.cg Committees (Contd)CII

6/6

6

2. Recommendations of the Committee (contd)

9. Consolidation of group accounts are optional; groupsinclude parent and subsidiary companies.

10. Major SEs should insist upon compliance certificate byCEO and CFO stating management is responsible.

11. Govt. must allow far greater funding to corp. sectoragainst security of shares and other paper.

12. Nominee Directors should be appointed by FIs only in theevents of serious and systematic debt default.

13. Cos. shall divulge in the prospectus the credit ratings ofprevious Rating Agencies also, besides the current one.

14. Cos. which default on fixed deposits shall not be allowedto accept further deposits and make inter-corporateloans and investments.

15. There should be reduction in no. of cos. where nomineedirectors were appointed by FIs based on FIs holdings

in these companies. *The End*