Draft IAIS-OECD Issues Paper on Insurer Corporate Governance

The IAIS - OECD have released a draft Issues paper on Insurer Corporate Governance for consultation. The purpose of the issues paper was to provide background on insurer corporate governance, describe practices and identify possible regulatory and supervisory issues.

For more details, please refer to:

Corporate Governance Lessons from the Financial Crisis

The OECD Steering Group on Corporate Governance published a report on Corporate Governance Lessons from the Financial Crisis.This report analysis the impact of failure and weaknesses in Corporate Governance on the financial crisis, including risk management systems and executive salaries.

For the Principles, please refer to::

Belgian Corporate Governance Code (2009 Code)

On 12 March 2009, the Corporate Governance Committee published the 2009 version of the Belgian Corporate Governance Code (2009 Code). The 2009 Code replaces the previous version from 2004

For the Policy, please refer to::

Recommendations for Corporate Governance

The Committee on Corporate Governance's Recommendations for corporate governance of August 15, 2005; section VI revised by February 6, 2008; and sections III and V were revised by December 10, 2008.

For more details, please refer to:

2009 Review of the effectiveness of the Combined Code

The Combined Code on Corporate Governance sets out standards of good practice in relation to issues such as board composition and development, remuneration, accountability and audit and relations with shareholders. All companies incorporated in the UK and listed on the Main Market of the London Stock Exchange are required under the Listing Rules to report on how they have applied the Combined Code in their annual report and accounts. Overseas companies listed on the Main Market are required to disclose the significant ways in which their corporate governance practices differ from those set out in the Code. The Combined Code contains broad principles and more specific provisions. Listed companies are required to report on how they have applied the main principles of the Code, and either to confirm that they have complied with the Code's provisions or - where they have not - to provide an explanation. On 18 March 2009 the Financial Reporting Council announced the latest in its series of regular reviews of the impact of the Combined Code on Corporate Governance.

For amended German Corporate Governance Code, please refer to: :

Companies (Appointment and Qualifications of Secretary) Amendment Rules, 2009

In exercise of the powers conferred by the clauses (a) and (b) of sub section (1) of section 642 read with clauses 45 of section 2 and section 383A of the companies Act 1956 (1 of 1956) the Central Government has made the Companies (Appointment and Qualification of Secretaries) Rules 2009, to further amend the Companies (Appointment and Qualification of Secretaries) Rule 1998. The amended rules were effective from January 5,2009.

For more details, please refer to:

Modification in the notification relating to constitution of NACAS

In exercise of the powers conferred by sub-section (1) of section 210A of the companies act, 1956 (1 of 1956) the Central Government has made further amendments in its notification of the Government of India in the Ministry of Corporate Affairs, published in the Gazette of India, dated May, 30, 2008 vide number S.O. 1270 (E).-

For more details, please refer to:

Companies (Issue of Indian Depository Receipts) (Amendment) Rules, 2009

In exercise of powers conferred by clause (a) of sub- section (1) of section 642 read with section 605A of the Companies Act the Central Government has made the Companies (Issues of Indian Depositary Receipts) Rules 2009 to further amend the Companies (Issues of Indian Depositary Receipts) Rules 2004. These amended rules were enforced from the date of their publication in the official Gazette.

For more details, please refer to:

Modifications in Section 220, 303 and 594 of Companies Act, 1956

In exercise of the powers conferred by clauses (a) and (b) of sub section (1) of section 610 C of the Companies Act (1 of 1956), the Central Government has made amendments to the Section 220, 303 and 594 of the Company Act 1956.

For more details, please refer to:

Companies (Central Government´s) General Rules and Forms (Amendment) Rules, 2009

In exercise of the powers conferred by sub- section of section 642 read with section 610B of the companies Act, 1956 (1 of 1956) the Central Government has made the Companies (Central Government’s) General Rules and Forms (Amendment) Rules 2009 to further amend the

Companies (Central Government’s) General Rules and Forms 1956 These amended rules have been enforced from 29th March, 2009.

The amended rules have revised Forms 1AA, 1AD, 23C & 24

For more details, please refer to:

Amendment to Companies (Accounting Standards) Rules, 2006

In exercise of the powers conferred by clause (a) of sub section (1) of 642 read with sub-section (1) of section 21 A and sub section (3c) of section 211 of the Companies Act 1956 (1 of 1956) the Central Government in consultation with the National Advisory Committee on Accounting Standards has made the companies (Accounting standards) Amendment Rules 2009 to amend the companies (Accounting Standards) Rules 2006. The amended rules were enforced on the date of their publication in the official gazette.-

For more details, please refer to:

Amendment to Schedule VI to the Companies Act, 1956

In exercise of the powers conferred by sub- section (1) of Section 641 of the Companies Act 1956 (1 of 1956) the Central Government has made the following further amendments in Schedule VI to the said act, namely:-

• In the said Schedule, in part I relating to "Form of Balance Sheet" under heading "A Horizontal Form, in column (6), the second paragraph, Explanation 1 and Explanation 2 shall be omitted.
• This notification shall come into force on the date of its publication in the Official gazette. .

For more details, please refer to:

click here....

Companies (Central Government's) General Rules and Forms (Second Amendment) Rules, 2009

In exercise of the powers conferred by sub- section of section 642 read with section 610B of the companies Act, 1956 (1 of 1956) the Central Government has made the Companies (Central Government’s) General Rules and Forms (Second Amendment) Rules 2009 to further amend the Companies (Central Government’s) General Rules and Forms 1956 These amended rules are enforceable from 31st May , 2009.

The amended rules have revised Forms 19, 20, 20A, 44, & 49.

For more details, please refer to:

click here....

I am happy to be here. I know that however much I appeal to you to keep Satyam issue out of your minds that is not going to happen and therefore in the first part of my speech let me deal with the Satyam issue and then we will deal with corporate governance.

Whenever anything goes wrong in a system on a substantial scale there are roughly 3 kinds of responses that this system should focus on. One is the immediate response, that asks the question what went wrong, what do we need to do in the near term to correct what has gone wrong and minimize the dimension; second question is what do we need to do in the medium term and the third question is when we have understood what exactly happened in its fullest detail? Do we see any systemic problem there or do we see any human failure and if there are systemic problems then what do we need to do to correct our system, if there was human failure was it bonafide, was it malafide? If it is malafide, then, what is the punishment that must visit the individuals who indulged in this kind of malafide behavior? I hope that our system will pass all the three tests.

The first test of what needs to be done immediately seems to have been addressed fairly well by the authorities that were in-charge of carrying out the immediate task. The board was superseded in a matter of one working day. The new board was in position in a matter of two working days and the investigations have commenced. There was a need to restate the accounts. The new board decided to engage professionals in order to restate the accounts. There was a need to see that company gets proper CEO, the board is engaged in that matter. We now have challenges in the medium term and these are whether our investigating agencies under different enactments will do their work with speed and efficiency and will be able to communicate to the outside world that that is work is being done with speed and efficiency and last part will be whether we will bring the culprits to book in a timely fashion. These challenges still remain and as one part of those investigating agencies

Once the details are out we will have to analyze whether there are some systemic problems and we would have to address them. At the same time, as regulators, we would have to avoid the temptation to come to conclusion and try to provide solutions without understanding the problem fully.

The 2-3 issues that have been thrown up, we need to first check what went wrong in Satyam and whether this is really desirable for the system needs to be opened up for public debate and over the medium term, we need to decide whether any tweaking of regulation is required here.

One of the issues that has been raised is desirability of rotation of auditors. We need to open this issue for public debate and understand what are the pluses and minuses and then decided whether rotation of auditors is good thing?

The second issue is whether you need an external agency doing the internal audit in a listed company. There are differing practices, practices with differing results and opinions on both sides. To my mind also this issue needs to be dabated. We have good companies which get this job done internally and also we have good companies which for running an educational course for the directors of companies. I am happy that CII is collaborating in this. We would be happy if any other industry association wants to joint that. We would want to run this because if there are any gaps in the understanding of independent directors as to what they need to do, we need to fill those gaps. Probably our debate for the past 2-3 years was entrust this job to external agency but what we will have to decide whether this needs to be regulatorily enforced or whether the practice as it is now, should continue.

The third issue that has been thrown up in the context is the role of non-promoter shareholders. More importantly, the institutional part of the non-promoter shareholders as to whether they need to get more active in the market. They can get more active in different forms. They can get active by putting out their voting record in the public domain or by trying to mobilize the other non promoter shareholders if they feel uncomfortable about some resolutions that the company wants passed at its AGM and so on. There are examples around the world where this kind of shareholder activism exists and we may not have to go too far in searching for this.

The last issue is any incident of this kind results lot of changes in laws and regulations. The temptation for the regulatory authority and government to legislate or regulate in areas that the listed companies think are legitimately their domain, is tremendous. The challenge is how do we arrive at a balance. There is certainly a need for intervention.

here is also something called excessive interventions and ability to walk that tight rope in a proper manner is necessary. On the basis of industry consensus, two steps have already been taken by SEBI. First problem we were faced was the acquisition against India incorporations and our listed companies in particular that all of you are like this, all your accounts are suspicious and all your auditing has been done in a shabby manner. The response to that on the basis of consultation with the industry as well as auditing profession, we have a committee where all these people have represented which said that let us get a peer review of the working papers of the auditors done for the NIFTY and sensex companies and some randomly chosen non-Nifty and non-sensex companies. That process has already started. When this review process is complete, we will be able to analyze the results that come out of it and we will be able to determine whether we need some major overhaul of the system or is it that we are OK, this was one of incident.

The other issue is that if prompters have pledged their shares then this is certainly price sensitive information that is available only to the promoter and the lender. It needs to be made available to the other shareholders as well and therefore as a disclosure requirement the disclosure of shares pledged by promoters has been mandated by SEBI through our regulations. As we go along we would be looking for fault lines, if we find them, if we are convinced that these fault lines, need mending we would do that quickly. I must compliment CII for holding this conference at more appropriate time. The structure of the conference is also very good. At the end of the day we all have to be conscious of the fact that rules, regulation and laws are merely like a university or college having good syllabus. That does not mean that it will produce good students or it will have good professors. Good syllabus is just the blue print with which we start. You need something more to make a good university or college. As regulator we need to understand the limitations of what law can lay down. At the same time the continuous effort to improve our syllabus and improve our standards must go on. Therefore we are actively looking at collaboration between CII and the National Institute of Security Managemen along the lines that we have to ensure that there is presence of independent directors in the Company who would ensure implementation of corporate governance practices. We will constantly have to examine as to how we can make the Corporate Governance process more effective.

Thank you.

The following initiatives were undertaken by NFCG towards promoting Corporate Governance (Oct –Dec 2008): - -

(A) EVENTS ORGANIZED BY / UNDER THE AEGIS OF NFCG

Series on Translating Governance Ideologies & legal Function as Business Enablers

The first of the four series on ‘Translating Governance Ideologies and Legal Functions as Business Enablers' was organized by Confederation of Indian Industry (CII) in partnership with NFCG on January 16, 2009 at Kolkata. The programme brought together corporate and finance professionals and facilitated a two-way information flow – with corporate vision and principle flowing down from the management level and decoded systems and activities flowing upwards. The programme focused on translating corporate governance ideologies, values and concepts into pragmatic ground-level doable activities with a focus on the legal framework of the Company; and also provide simple yet efficacious tools to assimilate and implement a robust system that would enable the structuring of the legal function and to manage risks arising out of legal non-compliances.

Corporate Governance Summit: India's Tryst with Corporate Governance

The 4th Corporate Governance Summit: India's Tryst with Corporate Governance was organized by Confederation of Indian Industry (CII) in partnership with NFCG on February 5,2009 at Mumbai.

The summit was organized in the view of the recent events in the domain that had brought a number of serious Corporate Governance issues in the spotlight and also sparked a debate on whether India possess adequate laws and guidelines for corporate governance. Thus the summit provided platform for deliberation and extensive interaction among the Govenment, regulators, Industry, professional and public at large on the recent Corporate Governance issues e.g. the role of the third party, Board (specially independent directors), promoters, management, Government and Regulators.

National Conference on Corporate Governance

The second National Conference on Corporate Governance was organized by Loyola Institute of Business Administration, Chennai (LIBA) in partnership with NFCG on February 9,2009 at Chennai. The conference-addressed issues concerning the emergence of the concept, the manner in which it crystallized into a subject of importance, its various problems issues, its constituents and how it was beginning implemented in India.

Corporate Compliance Forum India

The Corporate Compliance forum India was organized by Lexis Nexis in partnership with NFCG on February 24-25, 2009 at Mumbai. The conference focused on the practising Company Secretaries both in India and globally; Monitoring System and implementation of dynamic risk strategies; Role of the Board of Directors; Case studies about Corporate Social Responsibility; Ethics and compliance culture; Detection and prevention of fraud; Recent changes in business regulations from the management level and decoded systems and activities flowing upwards. The programme focused on translating corporate governance ideologies, values and concepts into pragmatic ground-level doable activities with a focus on the legal framework of the Company; and also provide simple yet efficacious tools to assimilate and implement a robust system that would enable the structuring of the legal function and to manage risks arising out of legal non-compliances.

Directors Orientation Programme

The Institute of Company Secretaries of India (ICSI) in partnership with NFCG organized Directors Orientation Programme on Corporate Governance on March 25, 2009 at New Delhi. The Orientation programme was the third out of four programmes organised by ICSI-NFCG at various place across the country during this year with an aim to provide opportunity to Board members to deliberate upon intricate issues in the good Corporate Governance practice. The programme focused on the needs and importance of CG, Independent Director Vs Directors independence; Changing paradigm in CG and Corporate ethics; Evolution of concept of CG and present regulatory framework; Directors roles, responsibility, duties, powers and liabilities; Audit Committee performance and effectiveness, etc. .

National Conference on Corporate Governance

IIM Calcutta in partnership with NFCG organized National Seminar on Corporate Governance: Corporate Governance at Cross Roads on March 27 2009 at Kolkata.

In the view of recent financial crisis and widespread feeling that the corporate governance model adopted by most countries has failed to deliver the desired results, this Conference aimed at reviewing the present Corporate Governance models and generate ideas on how to make the model more robust. The Conference focused on topics like Corporate governance in the financial sector; Role and effectiveness of independent directors in the present corporate governance model; Role of the auditor and the audit committee in corporate governance; and Corporate Social Responsibility.

National Seminar on Corporate Governance

The Institute of Chartered Accountants of India (ICAI) in partnership with NFCG organized National Seminar on Corporate Governance at March 28, 2009 at Hyderabad. The seminar was the last of four seminars organised by ICAI-NFCG at various places across the country during this year with an aim to create awareness in good governance practices. This seminar focused on the Roles of Regulators and harmonizing the regulatory requirements with that of Companies Act for effective Corporate Governance; Role of the Board and Audit Committee in ensuring best corporate governance; Corporate Governance in Family owned Enterprise and SMEs; Corporate Governance practices in banking, Insurance Companies and Public sector undertaking and role of CA's in ensuring better CG.

RESEARCH PROJECTS UNDER THE AEGIS OF NFCG

Ongoing Research Projects

Research on Family Run Business along with case studies-

Indian Institute of Management Calcutta (IIMC)

Research on Corporate Social Responsibility-

Symbioses Institute of Management (SIMS) Pune.

Research study on Improving Internal Controls for better Corporate Governance–

Symbiosis Institute of Management Studies, (SIMS) Pune.

Research study on Corporate Board Interlock in India and their implications for Good Corporate Governance-

Indian Institute of Management Bangalore (IIMB).

Research project on Group Companies in India-

National Law School of India University (NLSIU) Bangalore.

Case Study on areas relevant to the Corporate Governance –

National Law School of India University (NLSIU) Bangalore.

Research work on Corporate Governance -

Jamanalal Bajaj Institute of Management Studies (JBIMS), Mumbai.

Research study on Corporate Governance Practice in SMEs –

Administrative Staff College of India (ASCI) Hyderabad.

Developing Corporate Governance Norms for SMEs –

Indian Institute of Technologies Kharagpur (IITK).

Research study on Corporate Practice in SLPE in Andhra Pradesh –

Administrative Staff College of India, (ASCI) Hyderabad.

Case Study on Corporate Governance –

Management Development Institute (MDI), Gurgaon.

Directors' Orientation Programmes

• Audit Committee Programme for Corporate Directors –

Indian Institute of Management Bangalore (IIMB) at Bangalore.

• Directors Orientation Programmes –

Institute of Company Secretaries of India (ICSI) at Mumbai.

• Directors Orientation Programme–

The Institute of Company Secretaries of India (ICSI) at New Delhi.

• Risk Management and Oversight Programme for Corporate Governance–

SIndian Institute of Management Bangalore (IIMB) at Bangalore.

• Orientation Programme for Directors on Corporate Governance –

NALSAR University of Law at Hyderabad.

• Environment and Sustainability for Corporate Boards–

Indian Institute of Management Bangalore (IIMB) at Bangalore.

• Financial Disclosures and Reporting for Company Directors –

Indian Institute of Management Bangalore (IIMB) at Bangalore.

• Board Negotiation Dynamics for Company Directors –

Indian Institute of Management Bangalore (IIMB) at Bangalore.

• Corporate Strategy in Board Governance –

Indian Institute of Management Bangalore (IIMB) at Bangalore.

Faculty Orientation Programme

• Orientation Programme for Teachers–

NALSAR University of Law at Hyderabad.

• Faculty Orientation Programme-

Indian Institute of Management Bangalore (IIMB) at Bangalore.

• Faculty Development Programme –

Jamanalal Bajaj Institute of Management Studies (JBIMS) at Mumbai

Seminars/ Conferences/ Workshops

• Series on Translating Governance ideologies to veracity –

Confederation of Indian Industry (CII) at New Delhi and Mumbai.

• Seminar on the Roles and Responsibilities of Independent Directors –

Jamnalal Bajaj Institute of Management Studies Mumbai (JBIMS) at Mumbai.

• Seminar on Corporate Governance reform for State Level Public Enterprises of Orissa –

Administrative Staff College of India (ASCI) at Bhubneshwar.

• Seminar on the Roles and Responsibilities of Independent Directors-

Jamnalal Bajaj Institute of Management Studies Mumbai (JBIMS) at Mumbai.

• National Seminar on Corporate Governance in Unlisted Companies –

Confederation of Indian Industry (CII) at Bangalore. .

• National Seminar on Corporate Compliance Management and Due Diligence -

The Institute of Company Secretaries of India (ICSI) at New Delhi..

• Seminar on Corporate Governance reform for State Level Public Enterprises of Gujarat -

Administrative Staff College of India (ASCI) at Ahmedabad / Hyderabad.

• Seminar on Corporate Governance improving Compliance for State Level Public Enterprises of AP –

Administrative Staff College of India (ASCI) at Hyderabad

• Seminar on Corporate Governance reform for State Level Public Enterprises of Karnataka –

Administrative Staff College of India (ASCI) at Hyderabad.

• National Conclave on Corporate Governance in India –

Law and Legal Reforms –NFCG at Kolkata..

• Round Table on the Outcome of research on CSR & Improving Internal Controls –

Symbiosis Institute of management studies (SIMS), Pune

• International Conference on convergences of Corporate Governance Norms –

Indian Institute of Technology, Kharagpur (IITK).

• International Seminar: Change the World through Corporate Governance –

The Institute of Chartered Accountants of India (ICAI) .

• National Seminar- Future Perspectives on Corporate Governance –

University of Business School (UBS), Panjab..

Declamation Contest

• Declamation Contest-

National Law School of India University (NLSIU), Bangalore

International Conference on "Global Economic Recession and Corporate Governance – Role of Governance Professionals"

The Institute of Company Secretaries of India in partnership with NFCG and CASS Business School, London, UK is organising the International Conference on Corporate Governance on June 23, 2009 at London. The key objectives of the conference are:-

• To showcase the initiatives of Government of India and the ICSI in promoting good corporate governance.
• To understand the different countries’ perspective on corporate governance.
• To deliberate on developments in the of Corporate Governance practices in other Countries
• To appraise the participants on the benefit of adoption of best Corporate Governance practices.
• To create a culture of good corporate governance among corporates as a healthy way corporate sustainability even in the tough times.
• To make the participants appreciate the importance of protection of interest of different stakeholders in the governance process.
• International Cooperation Amongst Governance Professionals.
• Strategies to overcome the recession

Second International Conference on Corporate Governance in Emerging Markets

The second international conference on Corporate Governance in Emerging Markets is to be held on July 2-3, 2009 in Sao Paulo, Brazil. The conference aims to facilitate dissemination of state of the art research on corporate governance in emerging markets, with the objective of supporting policy and practice development.

For more details, please refer to:

2009 ICGN Annual Conference: "The Route Map to Reform and Recovery"

The ICGN convenes the world’s premier international event on corporate governance each year. In 2009, The Annual Conference would be held in Sydney, Australia between 13-15 July, 2009 at the Hilton Hotel. The Conference would bring together investors, directors, policy makers and stakeholders in a dialogue with a focus on practical action.-

For more details, please refer to:

If you have any comments / views / suggestions about this E - Newsletter, please write to us at:-

Executive Director National Foundation for Corporate Governance The Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi - 110 003 Tel.: 011- 2460 1180 Fax: 011- 2461 5693 E mail: ed.nfcg@cii.in Website: www.nfcgindia.org Study Team: Shalini Budathoki & Prasanna Venkatesh

Disclaimer Clause: The data used here are from various published and electronically available primary and secondary sources. We have taken care to verify and cross-check the accuracy of such data. However, despite due diligence, the source data may contain occasional errors. In such instances, NFCG would not be responsible for such errors.