Governance is an act of managing a corporate entity. Corporate Governance has a broad scope and includes social and institutional aspect. It is more than company administration. It is fair, efficient and transparent functioning of corporate management system. A code of conduct which the board of directors may abide by while running the corporate enterprise. Corporate Governance is all about what board of company does and the way it sets value of the corporate . Corporate Governance should come from within, it must not be imposed. Principles of Corporate Governance:
– Reporting and Integrity
CORPORATE GOVERNANCE IN INDIAN SETUP
Various acts and guidelines have also been published by Central Government from time-to-time.eg.: Desirable Corporate Governance Code by the Confederation of Indian Industry in 2009. In 2013 there was a major overhaul in the corporate governance norms like the introduction of mandatory provisions regarding whistle blowing policy, audit committee nomination , CSR committee , independent director etc. Companies Act provides a formal structure for corporate governance by enhancing disclosures, reporting and transparency through enhanced as well as new compliance norms. Some of the provisions are :-
– Composition of Board- Section 149 of the businesses Act, 2013 provides for appointment of minimum three directors during a public company and two directors during a private company. A board can have a maximum of fifteen directors but can appoint more directors subject to special approval.
Women Director– it’s mandatory to appoint a women director within the following classes of company: Listed company; Public unlisted company having paid-up share capital of 1 hundred crore rupees or more, or having a turnover of 300 crore or more.
Resident Director– Section 149(3) mandates that each company will have one director who has stayed in India for a period of not but 182 days.
Independent Director– Independent directors are impartial and convey expertise to the board. They play an important role in resolving conflicts among shareholders and the company. Section 149(6) provides for the qualifications for appointing an independent director during a public company.
As per section 178(6) of Companies Act, 2013 if a company has more than one thousand shareholders, debenture-holders, deposit-holders or any other security holders in a financial year then it is mandatory to constitute a stakeholder relationship committee. The main of the committee is to resolve the conflicts between the shareholders and the board of directors and address their grievances. The Audit Committee takes care of the financial reports and disclosures of a corporation . It is one among the foremost important components of a company governance structure. Companies Act, 2013 has mandated the interior audit surely classes of companies as specified under Section 138 of the businesses Act, 2013. Section 211 (1) of the businesses Act, 2013 shall establish an office called the intense Fraud Investigation office to research fraud concerning Company. The nomination and remuneration committee decides the choice criteria for the key managerial personnel (KMP) and determines the remuneration of the KMP’s and directors.
CORPORATE SOCIAL RESPONSIBILITY
• Corporate- Entity which makes profit
• Social Responsibility – Obligation to take those decisions and perform those actions which are acceptable in terms of the objective and values of the society.
So, CSR cab be explained as-
A management concept whereby the companies integrate social and environmental concern in their business operations and interact with the stakeholders.
It is basically endless commitment by business to behave ethically and contribute to economic development while improving the standard of lifetime of the area people and society at large.
Basic principle of CSR-
1. Corporate power should be used for social good.
2. It should not be used to cause social harm.
The Companies Act, 2013 has formulated Section 135, Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII which prescribes mandatory provisions for Companies to fulfil their CSR. In India the concept of CSR has been made compulsory for all the companies. It is governed by the Sec.135 of CA, 2013 which was passed by both House of Parliament and received assent of President on 29th August, 2013.
Applicability of CSR Provisions:
– Every Company including its holding or subsidiary having:
• Net worth of Rs. 500 Crore or more, or
• Turnover of Rs. 1000 crore or more, or
• Net Profit of Rs. 5 crore or more
during the immediately preceding financial year
Every Company on which CSR is applicable is required to constitute a CSR Committee of the Board:
Consisting of three or more directors, out of which a minimum of one director shall be an independent director. However, if a corporation isn’t required to appoint an independent director, then it shall have in 2 or more directors within the Committee. Company should work upon these mentioned activities. E.g. – Women Empowerment, old age homes, day care etc. Implementation of CSR activities can be done in any of the ways:-
- Directly on its own
- Through its own nonprofit foundation set up
- Through independently nonprofit organization that have at least 3 years record of working in such related activities.
- Collaborating their resources with other companies.
- CSR activities taken only within India shall be considered
- Fiscal help rendered to political parties is not considered as a CSR activity
- CSR expenditure must include all expenditure including contribution to corpus for projects or programmes associated with CSR activities approved by the board on the advice of its CSR committee. (Rule 6 of CSR rules, 2014)
- An annual report on CSR should be included in the Board report. (Rule 8 of CSR rules,2014)
- The Board of directors shall after taking into account the recommendations of CSR committee approve the CSR policy for the company and disclose content of such policy in its report the same shall be displayed on the company’s website.(Rule 9 of CSR rules ,2014).
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
If you are interested in participating in the same, do let me know.
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