Professional Documents
Culture Documents
Kumar Mangalam Birla Committee
Kumar Mangalam Birla Committee
Compiled By:
Keval Kothari (PG-10-85)
Ankit Lodhia (PG-10-86)
Yogesh Punjabi (PG-10-100)
Pooja Shah (PG-10-108)
Introduction
On May 7th, 1999, The Securities and Exchange Board of
India (SEBI) had set up a committee under Kumar
Mangalam Birla, member SEBI Board, to promote and
raise the standards of good corporate governance.
RECOMMENDATIONS
Mandatory Recommendations
1. Implementation in phases as per schedule:
By all companies getting listed for the first time.
Within financial year 2000-2001, not later than 31st March 2001, for
entities in group A of BSE.
Within financial year 2001-2002 , not later than 31st March, 2002, for
all companies listed, with paid up capital of Rs. 10 Crores.
Within financial year 2002-2003 , not later than 31st March, 2003, for
all companies listed, with paid up capital of Rs. 3 Crores.
2. Non- Executive directors should form 50% of the BoD, with some
independent directors.
The number of independent directors would depend on the nature of the
chairman of the board.
In case a company has a non-executive chairman, at least one-third of
board should comprise of independent directors and in case a company
has an executive chairman, at least half of board should be
independent
Mandatory Recommendations
3. Nominee directors- on selective basis:
Institutions should appoint nominees on the boards of
companies only on a selective basis where such
appointment is pursuant to a right under loan agreements
or where such appointment is considered necessary to
protect the interest of the institution.
13.Board should clearly define the role of CEO and key managers:
In the view of the Committee, the over-riding aim of management
is to maximize shareholder value without being detrimental to the
interests of other stakeholders.
The management however, is subservient to the board of directors
and must operate within the boundaries and the policy framework
laid down by the board.
The board is responsible for ensuring that the principles of
corporate governance are adhered to and enforced, the real onus
of implementation lies with the management.
It is responsible for translating into action, the policies and
strategies of the board and implementing its directives to achieve
corporate objectives of the company framed by the board.
Mandatory Recommendations
14.Board and Management must be accountable to the
shareholders:
As a part of the disclosure related to Management, the Committee
recommends that as part of the directors’ report or as an addition there to, a
Management Discussion and Analysis report should form part of the annual
report to the shareholders. This Management Discussion & Analysis should
include discussion on the following matters within the limits set by the
company’s competitive position:
Industry structure and developments.
· Opportunities and Threats
· Segment-wise or product-wise performance.
· Outlook.
· Risks and concerns
· Internal control systems and their adequacy.
· Discussion on financial performance with respect to operational performance.
· Material developments in Human Resources /Industrial Relations front, including
number of people employed.
Mandatory Recommendations
15. Shareholders
right to participate and informed on
fundamental corporate changes. Quarterly results to be put
up on company’s website. Postal ballot to be introduced.
And also in respect of other decisions relating to material changes such as
takeovers, sale of assets or divisions of the company and changes in
capital structure which will lead to change in control or may result in
certain shareholders obtaining control disproportionate to the equity
ownership.
In this context, for shareholders who are unable to attend the meetings,
there should be a requirement which will enable them to vote by postal
ballot for key decisions.
RECOMMENDATIONS