NURTURING & DEVELOPING THE EMERGING AREAS OF PRACTICE

Corporate Governance & Corporate Compliance Management

PAVAN KUMAR VIJAY, MANAGING DIRECTOR

“In this fast changing world…

opportunities are unlimited …,

and future belongs to those …

who grasp these opportunities before they become a

necessity.”

Emerging Scenario

Emerging Scenario

Simplified Law

e- Governance

Globalization

Single window Interface

Common Law

Globalization

What is Globalization

IntegrationInteraction

LawsCompaniesBusinessPeople

Thus, it is a process driven by international trade and investment and aided by information technology

Impact of Globalization

In WTO regime, Globalization will lead to

Commonality of Law

And

Common Law will lead to

Global Competition

Globalized Scenario

International Corporate Governance

International Common Regulatory Framework

Global Outsourcing of services

Global work culture

Quality of Competition

Globalization Challenges

Quality of Service

Time Commitment

International Operational Infrastructure

Qualitative competition among professionals

Adherence to International standards

e- Governance

What is e-governance?

For increasing Efficiency

For Simplification

of Laws

Use of Information Technology

Service Delivery

Uniformity & Transparency

Impact of e- Governance

Simplified Laws

IT Drive

n Services

Simplified Laws

IT Driven Services Shift of Focus

Procedural Compliances

Strategical Planning

e-governance & IT Scenario

Seamless Integration of National & International Business

From anywhere – Small village to big cities

At anytime – Early morning to midnight.

In any manner – Internet, Mobile, PDA, etc

24 X 7 Online Services

Real-time Due Diligence, Rating and Compliances

Global Data Banks

IT Driven regulatory procedures

Minimization of procedural steps

Minimization of Non-compliances

IT Driven compliance services

Strategic Role of all professionals

Global services

Impact of e-governance

Single –window Interface

Single window interface

implies

Complete services under one umbrella

In the emerging scenario of ..

Globalization,

Common Law,

e-governance,

Simplification of Laws &

Single Window interface

…

“Opportunities are unlimited …”

“And

Success will come only when preparation meets

opportunity…”

Preparations for success in Emerging Scenario…

Emerging Opportunities

Corporate Governance

Corporate Compliance

Management

“Not only opportunity

but

Corporate Governance

&

Corporate Compliance

Management

are demands of Emerging

Scenario…”

Corporate Governance (CG)

An Emerging opportunity in

Emerging Scenario

Corporate Governance

“CORPORATE GOVERNANCE

is creation of a culture of

consciousness, transparency and openness.

It refers to combination of laws, rules, regulations,

procedures and voluntary practices to enable the companies

to maximize the long-term shareholders value, customer

satisfaction and wealth.”

Corporate Governance Framework

Output – Input = Wealth Created ?

Sustainability

Happiness andProsperity of all

Stakeholders

Reinvestment

Distribu- tion

Research and Development HR Development Infrastructure Risk Management

SUPPLIERS Adequate Returns

HUMAN ASSETS Adequate Remuneration

CUSTOMERS Affordable Prices

PUBLIC Payment of Taxes and Partnership in National Development Projects

Wealth Creation Wealth Management Wealth Sharing

EnhancedCapabilities

Best Management Practices are Vital Here Law and Ethics are Vital Here

Stakeholders in Value Chain

SUPPLIERS CUSTOMERSHUMAN RESOURCE

Supply Funds, Materials and Services

Value Addition and Management of Resources

Give Opportunity to Co. to Satisfy their Needs

Adequate Returns for Funds, Material and Services Supplied

Adequate Salary and Security for leading a Happy Life

Best Quality Products and Customer Care at Minimum Prices

ROLE OF STAKEHOLDERS

EXPECTATIONS OF STAKEHOLDERS

Potential Suppliers, Human Resources and Customers

Biological, Economic and Cultural EnvironmentPUBLIC

PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT

Significance of CG

The significance of Corporate Governance lies in the fact

that its absence can undermine economic and financial

stability…

Significance of CG

Transparency in operations

Consciousness to adopt best

practices

Confidence of domestic &

international investors

Easier Access to capital (FII, VCF, Foreign Markets)

Entry of Best Talent

& Skill

International Tie-ups

Widened opportunities of

services

In nutshell…

GLOBAL GROWTH

Creation of Brand Image

Higher Valuation

Who shall take responsibility

A person who possesses the knowledge of

Law + Management

Information Technology

Marketing

Production And operations

Human Resources

Corporate Communication

Finance andAccounts

Legal

CorporatePlanning

Law + Management

Knowledge of …

But who possesses knowledge of

Law + Management

Company Secretar

y

Corporate Laws

Commercial Laws

Taxation Laws

Accounting Laws

Securities Laws

Corporate Restructuring & Insolvency Laws

Economic & Labour Laws

Financial, Treasury & Forex Management

Strategic Management, Alliances & International Trade

Governance, Business Ethics & Sustainability

Due Diligence & Corporate Compliance management

Law + Management

Thus, a Company Secretary is the person who is responsible

to ensure

Corporate Governance.

Role of ICSI

to create

Brand Affiliation of CS

With Corporate Governance

Implementation Strategies

Change mind set of Yourself and Promoters

Show Success story of Good Governance of other companies….

Show the VALUE CREATION

Create transparency in your dealing

Follow good governed Board practices

Compliance of Law in LETTER AND SPIRIT

Role of ICSI

ICSI has taken the responsibility to develop the concept of

Corporate Governance.

“ Corporate Governance is the application of best

management practices, compliance of law in true letter and

spirit 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 Companies Secretaries of India

ICSI efforts for CG

Vision & Mission

Vision- “To be global leader in development of

professionals specializing in corporate governance"

Mission- "To continuously develop high caliber

professionals ensuring good corporate governance and

effective management and carry out proactive research

and development activities, for protection of interest of

all stakeholders, thus contributing to public good“

ICSI efforts for CG

Award for Corporate Governance

Post – Membership course in Corporate Governance

Revision of course curriculum.

Increasing number of programmes & Seminars

Representations before International Regulatory

Authorities for recognition of CS as a Professional for

ensuring Corporate Governance

Future Endeavors

Secretarial Standards on Corporate Governance

Guidance note on Corporate Governance Practices

Branding of CS ascertained with Corporate Governance

Industry & Corporate Tie-ups

Corporate Governance is not about just doing the compliances.

CG is about Managing the Compliances.

“Managing Compliances is different from Just doing

compliances”

Corporate Compliance Management (CCM)

Another Emerging opportunity in

Emerging Scenario

Corporate Compliance Management

is nothing but the

Opportunity

Lying in

‘Compliance of All applicable laws’

Corporate Compliance Management

Present Status of Compliance Services

• Company LawHigh

• Listing Agreement & Securities LawsMedium

• All other LawsLow

Implementation of Compliance Services withCorporate Compliance Management

Step II : Identification

Step III : Evaluation

Step IV : Assessment

The Five step process …

Step V : Compliance Structure

Step I : Understanding the Company

Step I : Understanding The Company

- Company’s History & Background

- Capital Structure & Evolution

- Promoters & Group Companies

- Management & Administration buildup

- Financial Soundness & Debt Structure

- Risk Management & Protection - Licenses & Approvals

Step II : Identification Process

General application of laws

Sectoral applications

Industry / Segment applications

Geographical applications

Number of Employees

Transaction applications

Corporate Laws

Taxation Laws

Industrial & Labor Laws

Securities Laws

General application of Laws

Sectoral application of Laws

Sector

Public Private

Service

Manufacturing

Trading

Industry/ Segment wise application of Laws

Media And Entertainment

Infrastructure, Power And Telecom

IT Solutions

IT Enabled Services And BPO

Textiles

Tourism And HotelCapital Market And Its Intermediaries

Engineering and Construction

FMCG

Agriculture AndFood Processing

Capital Goods

Drugs, Pharma And Healthcare

Banking And NBFC

Financial Services

Global Operations

Geographical application of Laws

Indian Operations

Step III – Evaluation of Compliance Timings

Compliance Timings

One Time Fixed/Regular Event based

Identify the gap between the

present compliance system and

the results of evaluation process

Step IV - Assessment

Establishing Controls &

Standard

Delegation of Responsibility

Analysis & Assessment

Compliance Reporting

Step V : Creation Of Compliance Structure

Compliance Management Tools

Checklists

Due Diligence

Softwares

Data banks

Research & Updations

Case Study

CCM in Corporates

Explaining the Process

CEMENT INDUSTRY

• Public Limited Company• Listed Company – BSE, NSE• Manufacturing & Trading• Exporting Company• 10,000 No. of Employees (Approx.)• Units Located at Bhubaneswar, Rajnagpur

Understanding The Company

Identification of Applicable Laws

Explaining the Process

On the basis of General Corporate Information – Public Company, Listed at BSE, NSE

• Companies Act, 1956• Income Tax Act, 1961• SEBI (Insider Trading) Regulations, 1992• SEBI (Substantial Acquisition of Shares & Takeovers)

Regulations, 1997• Listing Agreement

Identification of Applicable Laws

Explaining the Process

On the basis of Sector – Manufacturing and Trading

• National Environment Policy

• Environment (Prevention of pollution control) Act, 1986

• Central Excise Act

Identification of Applicable Laws

Explaining the Process

On the basis of Type of Industry – Cement

• Cement (Quality Control) Order, 2003

• Limestone and Dolomite Mines Labour Welfare Fund Act, 1972

• Mines and Minerals (Development and Regulation) Act, 1957

• Mineral Conservation and Development Rules, 1988

• Metalliferous Mine Regulations, 1961.

• Explosives Act, 1884

Identification of Applicable Laws

Explaining the Process

On the basis of No. of Employees

• Employees’ Provident Funds & Miscellaneous Provisions Act, 1952

• Factories Act, 1948

• Payment of Gratuity Act, 1972

• Industrial Dispute Act, 1947

• Employees State Insurance Act, 1948

• Payment of Wages Act, 1936

• Minimum Wages Act, 1948 & Minimum Wages (Central) Rules, 1950

Identification of Applicable Laws

Explaining the Process

On the basis of Activities – Exporters, Deals in foreign Exchange

• FEMA, 1999

• Foreign Trade Policy

• Customs Act

Identification of Applicable Laws

Explaining the Process

On the basis of location

• Shops and Commercial Establishments Act

• Value Added Tax

• Labour Laws

Role of ICSI

To initiate more Programmes and Workshops

To increase the Horizon of Institute

To increase the strength of Members

Focus on other Laws

Get a good brand – CORPORATE COMPLIANCE MANAGEMENT

Thus, Opportunities are Unlimited …

Its just a matter of Creativity, Confidence and

Communication …

…and also Perception and Positive Thinking

So now, we need to prepare ourselves to create niche in the emerging scenario …

Globalization Brings Opportunities

Threat

Th

reat

Th

reat

Threat

Globalization - Pessimist Perception

Threat of Invasion of Service Sector by Foreign Giants

Opportunity

Opportu

nity

Opport

unit

y

Opportunity

Globalization - Optimist Perception

But merely optimism will not do

optimism with Confidence & Right Attitude will …

The emerging scenario requires us to reinvent everything -

to think of ourselves as compared to others …

“Adopt technology to defeat technology”

is the latest survival mantra ….

Go IT …

Go IT …

Reduce time consumption in repetitive tasks.

Devote more time on Strategic analysis, value additions

and planning.

Use on-line regulatory services.

Make use of exhaustive databases, checklists, research

papers available online.

Manage multiple tasks through IT.

Use IT to shorten procedure and shift to STRATEGIES and

PLANNING.

To become

A Strategic Manager

&

A Corporate Planner

Learn

The 80:20 Theory

80%

20%

Filing forms & Applications

Registers & Returns

Checklists

Strategy

Management

Research

Focus on Procedural Complianc

es

Present Focus of Services

Focus of services in emerging Scenario

20%

80%

Focus on Strategical Planning

Filing forms & Applications

Registers & Returns

Checklists

Strategy

Management

Research

See the Horizon Beyond Company Law

Its time to go beyond the pre-defined framework.

Always say ‘YES’, its my area of work

“Jumping at several small opportunities may get us there

more quickly than waiting for one big one to come along.”

Move with a Direction

Services Provided by an Ordinary PCS

No Directi

on

Move with a new Direction

Piecemeal services

Single Window interface call for Synergy of

Brand

Knowledge

Capital

Infrastructure

Collaboration is the buzz word …

Quality of

Service

CorporateLaws

EconomicLaws

TaxationLaws

WTO & IPR

InternationalTrade Law

IT & BPOManagementConsulting

Finance and Accounting

Commerce

BrandSynergy

InfrastructureSynergy

CapitalSynergy

Collaborative Commerce

SingleWindowInterface

KnowledgeSynergy

GlobalPresence

Growing Revenues

Growing Customers

Growing Nations

CS + CA + CWA + MBA

+ LLB

“Problems becomes opportunities,

when right people come together …”

Enhanced Capability to compete with Global giants

Global Reach

Brand leverage

Wider Area of Expertise

Risk Minimization

Active Networking and Public Relations

Attraction of best talent

Advantages Collaborative Commerce

"We do not have to become heroes overnight…

Just a step at a time, meeting each thing that comes up, seeing it

is not as dreadful as it appeared, discovering we have the

strength to stare it down."

Quality Brand Building

Knowledge Quality Image

Opportunities have knocked your door …

But still …

You have to get off from your seat and open the door….”

… and if Opportunity does not knock your door….”

build the door….”

Thank You …

PAVAN KUMAR VIJAY, MANAGING DIRECTOR