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  • Narayana Murthy Committee Report, 2003

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    The Narayana Murthy Committee was set up by SEBI in 2003 to review corporate governance practices in Indian companies and make recommendations. The Committee, chaired by N.R. Narayana Murthy, submitted its report in February 2003 expressing the regulator's desire to promote better governance. The report made mandatory recommendations focusing on strengthening audit committees, improving financial disclosures, and requiring boards to assess business risks. It also suggested best practices for related party transactions, use of IPO proceeds, risk management, codes of conduct, and the appointment of directors.

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    The Narayana Murthy Committee was set up by SEBI in 2003 to review corporate governance practices in Indian companies and make recommendations. The Committee, chaired by N.R. Narayana Murthy, submitted its report in February 2003 expressing the regulator's desire to promote better governance. The report made mandatory recommendations focusing on strengthening audit committees, improving financial disclosures, and requiring boards to assess business risks. It also suggested best practices for related party transactions, use of IPO proceeds, risk management, codes of conduct, and the appointment of directors.

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    8K views5 pages

    Narayana Murthy Committee Report, 2003

    Uploaded by

    shanky0172
    The Narayana Murthy Committee was set up by SEBI in 2003 to review corporate governance practices in Indian companies and make recommendations. The Committee, chaired by N.R. Narayana Murthy, submitted its report in February 2003 expressing the regulator's desire to promote better governance. The report made mandatory recommendations focusing on strengthening audit committees, improving financial disclosures, and requiring boards to assess business risks. It also suggested best practices for related party transactions, use of IPO proceeds, risk management, codes of conduct, and the appointment of directors.

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    of 5

    NARAYANA MURTHY

    COMMITTEE REPORT, 2003


     Committee was set up by SEBI under chairmanship of
    N.R.Narayana Murthy. Report was submitted in February
    2003,signifying regulator’s anxiety to expenditiously promote
    corporate governance in Indian companies.
     The Committee’s term of reference were :

    1. To review the performance of corporate governance.

    2. To determine the role of companies in responding to rumour and


    other price sensitive information circulating in the market.

    The committee report expresses in total concurrence with the


    recommendation contained in Naresh Chandra Committee report
    on following counts:
    1. Disclosure of contingent liabilities.
    2. Certification by CEO and CFO.
    3. Definition of independent directors.
    4. Independence of audit committees.

    o Company came out with two sets of recommendations ie.,


    Mandatory recommendations and Non-mandatory
    recommendations.
    o Mandatory focus on strengthening the responsibilities of audit
    committee, improving the quality of financial disclosure and
    proceeds from initial public offering, requiring corporate
    executives board to assess and disclose business risk in annual
    reports of companies.
    Mandatory Recommendations
    Audit committee: is the bedrock of quality governance. Committee
    suggested that the audit committee of publicly listed company's
    should be required to review the following information:
    1. Financial statement and draft audit report

    2. Management discussion and analysis of financial conditions and


    result of operation
    3. Report relating to compliance with laws and risk management

    4. Management letters of internal control weakness issued by


    statutory internal auditors.
    5. Record of related parties transaction.

    Narayana murthy committee has not taken view on rotation of


    auditors.
     Related Party transaction: Statement of transaction with related
    parties.
     Proceeds from intial public offerings: Companies raosing money
    through intial public offering should disclose to audit committee.
    The use an application of funds under majority heads on quarterly
    basis.
     Risk management : The committee as deemed it necessary for the
    boards of committee to be fully aware of the risk involved in the
    business.
     Code of conduct: The committee has recommended that it should
    be obligatory for board of a company to laid down the code of
    conduct for all management.
     Nominee director: The committee recommended doing way with
    nominee director. If a corporation wishes to appoint a director on
    the board. Search appointment should be made by the shareholder.

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