Narayan Murthy Committee on Corporate Governance.pptx

in this PPT there is a complete description about Narayan Murthy Committee on Corporate Governance

1. Narayan Murthy Committee A committee that gave a major breakthrough for Indian Corporate Governance

2. Narayan Murthy Committee 01 INTRODUCTION 03 NON-MANDATORY RECOMMENDATIONS 02 MANDATORY RECOMMENDATIONS 04 CLAUSE-49

3. INTRODUCTION 01 Why Narayan Murthy Committee?

4. The Securities and Exchange Board of India (SEBI) had constituted a Committee on Corporate Governance in 2002 It was set up to review Clause 49, and suggest measures to improve corporate governance standards. Some of the major recommendations of the committee primarily related to audit committees, audit reports, independent directors, related party transactions, risk management, directorships and director compensation, codes of conduct and financial disclosures. INTRODUCTION

5. MANDATORY RECOMMENDATIONS 02

6. Mandatory Recommendations AUDIT COMMITTIEES Strengthening its responsibilities DISCLOSURES Improving the quality of financial RISKS Assess and disclose business risks in the annual reports COMPENSATION Improved disclosures relating to compensation paid to non-executive directors.

7. NON-MANDATORY RECOMMENDATIONS 03

8. MANDATORY RECOMMENDATIONS NON- QUALIFIED STATEMENTS Mercury is the closest planet to the Sun TRAINING Instiute a system of training of the Board EVAULATION Evaulation of the performance of Board NON-

9. CLAUSE-49 04

10. CLAUSE-49 BOARD SUBSIDARIES DISCLOSURES AUDIT COMMITTEE 2 3 4 1 5 7 9 CEO/CFO CERTIFICATION REPORT ON CORPORATE GOVERNANCE COMPLIANCE

11. 1. BOARD OF DIRECTORS A. COMPOSITION B. COMPOSITION AND DISCLOSURE C. OTHER PROVISIONS D. CODE OF CONDUCT

12. COMPOSITION Combination of executive and non executive directors with not less than fifty percent A t least one-third of the board should comprise of independent directors

13. COMPENSATION AND DISCLOSURE Any compensation paid to non-executive directors shall require previous approval of shareholders in general meeting

14. OTHER PROVISIONS The board shall meet atheist four times a year A director shall not be member in 10 committees or act as Chair in more than 5 committees across all companies in which the person is action as Director

15. CODE OF CONDUCT The Board shall lay down Coe of Conduct for all Board members and senior management of the company All Board members and senior management personnel shall affirm compliance on code on an annual basis

16. 2. AUDIT COMMITTEE A. QUALIFIED & INDEPENDENT B. MEETING C. POWERS D. ROLES E. REVIEW OF INFORMATION

17. QUALIFIED AND INDEPENDENT COMMITTEE The Audit Committee shall have minimum three directors as members All members of the committee shall be financially literate and at least one member shall have expertise in accounting or related fields

18. MEETING OF AUDIT COMMITTEE The audit committee should meet at least four times in a year and not more than four months shall elapse between two meetings.

19. POWER OF AUDIT COMMITTEE To investigate any activity within its terms of reference. To seek information from any employee. To obtain outside legal or other professional advice. To secure attendance of outsiders with relevant expertise, if it considers necessary.

20. ROLES OF AUDIT COMMITTEE Disclosure of its financial information The appointment and removal of the statutory auditor and the fixation of audit fees. Approval of payment to statutory auditors Reviewing the annual financial statement before submission to the board for approval Reviewing performance of statutory and internal auditors

21. REVIEW OF INFORMATION Analysis of financial condition Statement of significant related party transactions submitted by management; Management letters/ letter of internal control Internal audit reports The appointment, removal and terms of remuneration of the chief internal auditor

22. 3. SUBSIDARY COMPANIES At least one independent director on the board of directors of the holding company shall be a director on the board of directors of a material non listed Indian subsidiary company. Review the financial statements The minutes of the board meetings of the unlisted subsidiary company shall be placed at the board meeting of the listed company

23. 4. DISCLOSURE Basis Of Related Party Transactions Disclosure Of Accounting Treatment Board Disclosures – Risk Management Procedures From Public Issues, Right Issues, Preferential Issues Etc. Remuneration Of Directors Management Shareholders

24. 5. CERTIFICATION CEO/ CFO shall certify to the board that: They have reviewed financial statements and the cash flow statement for the year There are no fraudulent, illegal or volatile transactions. They have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting They have indicated to the auditors and the audit committee about significant changes in internal control, in accounting policies and Instances of significant fraud

25. 6. REPORT ON CG separate section on corporate governance in the annual reports of company companies shall submit a quarterly compliance report to the stock exchanges within 15 days from the close of quarter

26. 7. COMPLIANCE The company shall obtain a certificate from either the auditors or practicing company secretaries The non- mandatory requirements may be implemented as per the discretion of the company.

27. ANY QUESTIONS??