No.11/18/2000-CL.V
Government
of India
Ministry
of Law, Justice & Company Affairs
Department
of Company Affairs
…
5th
floor, `A’ Wing,Shastri Bhavan,
Dr.
R.P. Road, New Delhi – 110 001.
Report
of the Study Group on Corporate Excellence set up by the Department of Company
Affairs
In
order to effectively operationalise
the concept of excellence in corporate governance on a sustained basis to
sharpen India’s global competitiveness edge and to further foster and develop
corporate culture in the country, the Department of Company Affairs (DCA) had,
under the chairmanship of Dr. P.L. Sanjeev Reddy, Secretary, DCA, set up on 15.5.2000 a Study Group. The Study Group had subsequently constituted a Task Force on 22.5.2000
under the chairmanship of Shri S.
Rajagopalan, former Chairman, MTNL, New Delhi. The Task Force had met on several
occasions in New Delhi and Bangalore. The members of the Study Group had also an
occasion to interact with the delegates of Common Wealth Secretariat on Centre
for Corporate Governance, London led by Mr. Michael Gillibrand. The Study Group also had the benefit of
the presentations of various Chambers of Commerce and Professional Institutes.
2. The
Report of the Study Group contains several far reaching
recommendations that would take standards of Corporate Governance in the country
to Commanding Heights and compares very favourably with international
practices. Some of the key
recommendations are as under:
n
Setting
up of an Independent, Autonomous Centre for Corporate Excellence:
to
mainly accord accreditation and promote policy research and
studies, training and education and awards etc. in the field of corporate
excellence through improved corporate governance.
n
Introducing
formal recognition of Corporate Social Responsibility with
the first steps towards Triple-Bottomline Accounting and
Reporting.
n
Introducing
measures for greater shareholders participation through
multiple-location meetings,
electronic-media-assisted display of corporate information and views on
proposed resolutions etc.
n
Clearer
distinction between direction and management that
would ensure that the executive directors are held responsible for legal and
other compliance with the non-executive directors are charged with strategic and
oversight responsibilities for the company’s business and for ensuring and
monitoring appropriate processes and systems are in place for necessary
compliance. Suggestions for legislative recognition of direction and management
as distinct though complementary functions of the board and the executive
respectively, through appropriate grouping of provisions.
n
Highlighting
directorial commitment and accountability through
fewer and more focused board and committee memberships, tighter delineation of
independence criteria and minimization of interest-conflict
potential.
n
Suggesting
application of corporate governance principles to Public Sector Undertakings,
certainly in case of Listed Companies, and preferably even in case of Unlisted
Companies,
in terms of freeing them from multiple surveillance agencies and upgrading their
boards with independent directors.
3. I had
mentioned in the Rajya Sabha on
30.11.2000 that an amount of
Rs. 136 crore had been collected under the Company Law Settlement Scheme, 2000
launched by my Department. The
Finance Minister has been requested to release an amount of Rs. 25 crore
from the above amount to be used as
a corpus for setting up of an
Institute for Excellence in
Corporate Governance. The response has been positive and constructive. The
present report marks a distinct headway towards accelerating the process towards
better corporate governance.
*********
Endt.No.
11/18/2000-CL.V dated 20th December, 2000
Copy
forwarded to:
1.
PS
to Minister (LJ&CA)
2.
Sr.
PPS to Secretary (DCA)
3.
PA
to JS(A)/PS to JS(B)
4.
All
RDs/ROCs/OLs
5.
All other officers and Sections in the Deptt.
6.
The
Secretary, Company Law Board
7.
The
Secretary, MRTP Commission
8.
DGIR
9.
NIC,
DCA with the request that this Press Note may please be placed at the DCA's Webpage.
10.
The
Editor, 'Company News & Notes', R&S Division.
11.
Library.
12.
Secretary,
ICAI/ICWAI/ICSI
13.
Deptt.
of Economic Affairs (Banking Division), "Jeevan Deep" Parliament Street, New
Delhi.
14.
Deptt.
of Economic Affairs, North Block, New Delhi (Shri Shashank Saksena, Joint
Director, Investment Division).
15.
Department
of Industrial Policy & Promotion (IP Section), Udyog Bhawan, New
Delhi.
16.
SEBI,
Mittal Court, B Wing, 224 Nariman
Point, Mumbai-400 021.
17.
RBI,
Central Office, Mumbai.
18.
Director
(Commercial), Office of C&AG of India, 10 Bahadur Shah Zafar Marg, New
Delhi.
19.
Standing
Conference of Public Enterprises, SCOPE
Complex, 7 Lodi Road, New Delhi-110 003.
20.
Director,
Indian Investment Centre, D/o Economic Affairs, Jeevan Vihar, Sansad Marg, New
Delhi-1.
21.
All
Chambers of Commerce & Industry
(As per Standard Despatch List)
22.
Editors,
Journals of ICAI, ICWAI,
ICSI.
23.
Editor,
'Upabhokta Jagaran' D/o Consumer Affairs and Consumer Distribution System,
Krishi Bhavan, New Delhi-110 001.
24.
Editor,
Corporate Courier, C-163, Shastri
Nagar, Jodhpur-342003
25.
Editor,
Bombay Chartered Accountants Society, Church Gate Mansion, `A' Road, Church Gate, Bombay- 400 020.
26. Institute of Corporate Directors of India, 38,
1st Floor, Jaora Compound,
Jethwa Chambers,
Indore-452001. (MP)
27. Guard
File.
28. Spare Copies -
10
29. Facilitation Counter –
20 copies.
(R.N.
Vaswani)
Under Secretary to the Govt. of
India
Ph: 3389622