PRESENTATION

IOD, PROGRAMME ON :“MASTER CLASS FOR DIRECTORS”

SESSION ON :

“DUTIES , RESPONSIBILITIES &

LIABILITIES OF DIRECTORSHIP” Wednesday, March 05, 2008, Mumbai

D - DIRECT I - INTERACT R - REVIEW E - ENABLE C - CONTROL T - TRUST O - OVERSEE R - REGULATE

TOP MANAGEMENT PROCESS

• ROLE OF BOARD• ROLE OF BOARD SUB-COMMITTEES• ROLE FOR EXTERNAL DIRECTORS• ROLE OF MIS – LIFELINE OF COMPANY

• ENSURE COMMUNICATION – UP AND DOWN

• COLLABORATIVE APPROACH

NRN/HPCL

CORPORATE MANAGERIAL PROCESS

• OVERALL MANAGEMENT OF COMPANY• LAYERS OF AUTHORITIES• BOARD AT APEX LEVEL• SENIOR MANAGEMENT TEAM (INTERNAL)• FUNCTIONAL / SBU HEADS • WORKING LEVEL GROUPS • BOARD SUB-COMMITTEES

NRN / HPCL

BOARD’S ROLE - MACRO

• DEVELOPMENT OF VISION• STRATEGY TO ATTAIN VISION• INTERNAL GUIDANCE / SUPERVISION• COMPLIANCE OF REGULATIONS• FOCUS ON GOVERNANCE / CSR• STRATEGY FOR SUSTENANCE /

GROWTH. NRN / HPCL

ROLES / DUTIES / RESPONSIBILITIES

- MANAGERIAL

- SUPERVISORY

- REGULATORY

- FIDUCIARY

- GENERAL

DUTIES

• DIRECTORS - BOTH TRUSTEES & AGENTS• FACILITATE GOOD GOVERNANCE • FACILITATE GOOD PERFORMANCE & GROWTH• FULL DISCLOSURE TO SHAREHOLDERS• ENSURE GOOD SYSTEMS / PROCEDURE / CONTROLS • ENSURE PERIODIC REPORTING / EXCEPTION REPORTS• DILIGENT USE OF COMPANY RESOURCES• GOOD HR ENVIRONMENT

LIABILITIES

• ERRORS (BONAFIDE / MALAFIDE)• ULTRA-VIRES ACTS• FRAUDULENT ACTS• THIRD PARTY LIABILITIES• DEFENSE IN LEGAL CASES • LIABILITIES POST RETIREMENT - ACTS OF COMPANY BEFORE RETIREMENT - ACTS OF COMPANY AFTER RETIREMENT• INSURANCE COVERAGE

…..TO BE CONTD

LIABILITIES

……….CONTD/

• RIGHT OF DISSENT IN BOARD DECISIONS• FINE & IMPRISONMENT• PERSONAL LIABILITIES• CIVIL LIABILITIES• CRIMINAL LIABILITIES

ESSENCE OF GOOD GOVERNANCE

• ADHERENCE TO REGULATIONS

• TRANSPARENT PROCESS

• FAIR & ETHICAL

• CONCERN FOR THE SOCIETY

• EMPHASIS ON MAXIMUM DISCLOSURE

CLAUSE 49 – IMPORTANT AREAS

• AUDIT COMMITTEE

• CEO / CFO CERTIFICATION

• RISK MINIMISATION

• LEGAL COMPLIANCE

• CODE OF CONDUCT

• INDEPENDENT DIRECTORS

• PERIODIC DISCLOSURES

WHOLE-TIME / PART-TIME

WHOLE TIME :

• ONLY ONE POSITION

• CAN BE PART-TIME IN OTHER COMPANIES

• FULL RESPONSIBILITY OF THE POSITION

• FULL ACCOUNTABILITY

• POWER TO DELEGATE , BUT ACCOUNTABLE

• LAW MAKES NO DISTINCTION ON DIRECTORS’ ACCOUNTABILITY / LIABILITY

WHOLE-TIME / PART-TIME

……CONTD

PART- TIME :

• ACCOUNTABLE TO BOARD DECISIONS• NUMBER OF COMPANIES ; 15

• LIMIT ON MEMBERSHIPS OF COMMITTEES - 10

LIMIT ON CHAIRMANSHIPS OF COMMITTES - 5

CODE OF CONDUCT

• TRUSTEE FOR THE COMPANY

• CONFIDENTIALITY

• PROTECTING INTEREST OF THE COMPANY

• NO UNDUE GAIN / BENEFITS

• DISCLOSURE OF OTHER DIRECTORSHIP

• INTERESTED CONTRACTS

BOARD SUB-COMMITTEES

• AUDIT COMMITTEE• SHAREHOLDERS GRIEVANCE

REDRESSAL • INVESTMENT COMMITTEE• HR COMMITTEE• PROJECTS REVIEW COMMITTEE• OTHER MAJOR AREAS

NRN / HPCL

ROLE OF EXTERNAL DIRECTORS

• TOTAL INDEPENDENCE• PROVIDE EXTERNAL VIEWPOINTS• SEEK CRITICAL INFORMATION• MONITORING / REVIEW ROLE• FACILITATE CORPORATE GOVERNANCE

NRN / HPCL

AREAS FOR CAUTION

• LIMIT ON THE NO.OF DIRECTORSHIPS • SEEK INFORMATION BEFORE ACCEPTING

DIRECTORSHIP• REVIEW PAST FIVE YEARS ANNUAL REPORT• ENSURE LEGAL COMPLIANCE REPORTING• ACCURACY OF DATA (E.X. PROSPECTUS)• INTERACT WITH COMPANY SECRETARY• ENSURE OWN LEGAL COMPLIANCES• REGULAR SELF UPDATION• SEEK INFORMATION / CLARIFICATIONS• PRESERVE IMPORTANT PAPERS

GENERAL

• GOOD GOVERNANCE• GOOD CSR• TRUST OF STAKEHOLDERS• TRUST OF PUBLIC

• COMPANIES KNOWN FOR HIGH GOVERNANCE

- TATAS - INFOSYS - GE

GOVERNANCE

• Governance is streamlined Managerial Process.• Compliance of External Regulations• Adherence to Internal Procedures• Proper Documentation• Ensure Accuracy of Data• Ensure Disclosure / Reportings• Retention / Retrieval of Documents• Ensure smooth Succession Planning• Facilitate overall Corporate Governance

RECENT ISSUES OF DEBATE

• PART-TIME OR WHOLETIME - CEO• COMPOSITION OF BOARD• WHOLE-TIME V/S. PART-TIME• REMUNERATION OF INDEPENDENT

DIRECTORS• CG & CSR – CAN IT CO-EXIST• TOO MUCH OF REGULATIONS ?

NRN / HPCL

THANK YOU