Standards - Corporate Governance
Regulatory framework on corporate governance
The corporate governance mechanism for companies in India are described in the following enactments/ regulations/ guidelines/ listing agreement:
- The Companies Act, 2013 inter alia contains provisions relating to board constitution, board meetings, board processes, independent directors, general meetings, audit committees, related party transactions, disclosure requirements in financial statements, etc.
- Securities and Exchange Board of India (SEBI) Guidelines: SEBI is a regulatory authority having jurisdiction over listed companies and which issues regulations, rules and guidelines to companies to ensure protection of investors.
- Standard Listing Agreement of Stock Exchanges: For companies whose shares are listed on the stock exchanges.
- Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI): ICAI is an autonomous body, which issues accounting standards providing guidelines for disclosures of financial information. Section 129 of the New Companies Act inter alia provides that the financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under s 133 of the New Companies Act. It is further provided that items contained in such financial statements shall be in accordance with the accounting standards.
- Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI): ICSI is an autonomous body, which issues secretarial standards in terms of the provisions of the New Companies Act. So far, the ICSI has issued Secretarial Standard on "Meetings of the Board of Directors" (SS-1) and Secretarial Standards on "General Meetings" (SS-2). These Secretarial Standards have come into force w.e.f. July 1, 2015. Section 118(10) of the New Companies Act provide that every company (other than one person company) shall observe Secretarial Standards specified as such by the ICSI with respect to general and board meetings.
Read : Artical on Corporate governance in India by Deloitte
Full regulatory requirements and framework explained by Vaish Associates Advocates
Good governance has 8 major characteristic
Sustainability Reporting
| Internal Factors requiring Sustainability Reporting | External Factors requiring Sustainability Reporting |
| Gain better information | Improve stakeholder communication |
|
Improve risk management
|
Improve accountability and transparency |
| Improve performance | Create a positive and trustworthy image |
|
Save resources and money
|
If Public sector, Build trust in the public sector |
| Improve staff satisfaction |
World Resourses Institute
WRI’s mission is to move human society to live in ways that protect Earth’s environment and its capacity to provide for the needs and aspirations of current and future generations.
WRI organize our work around six critical goals that the world must achieve this decade in order to secure a sustainable future:
Climate: Protect communities and natural ecosystems from damage caused by greenhouse gas emissions, and generate opportunities for people by catalyzing a global transition to a low-carbon economy.
Energy: Drive the scale-up of clean, affordable power systems throughout the world to deliver sustainable socio-economic development.
Food: Ensure the world’s food systems reduce their impact on the environment, drive economic opportunity, and sustainably feed 9.6 billion people by 2050.
Forests: Alleviate poverty, enhance food security, conserve biodiversity, and mitigate climate change by reducing forest loss and restoring productivity to degraded, deforested lands.
Water: Achieve a water-secure future by mapping, measuring, and mitigating global water risks.
Cities and Transport: Improve quality of life in cities by developing and scaling environmentally, socially, and economically sustainable urban and transport solutions.
Terms & Definitions
corporate governance (OECED Definition) : “a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and shareholders, and should facilitate effective monitoring, thereby encouraging firms to use recourses more efficiently.”
Safeguard : identify, avoid, and minimize harms to people and the environment.
Stake holder engagement manual Volume 1 : AA1000 SES
Accountability: An organisation can be considered as accountable when it accounts to its stakeholders regarding material issues (transparency), responds to stakeholders regarding these issues (responsiveness) on an ongoing basis, and complies with standards to which it is voluntarily committed, and with rules and regulations that it must comply with for statutory reasons (compliance)2
Communication: Any manner of information sharing with stakeholders, generally through one-way, non-iterative processes Consultation: The process of gathering information or advice from stakeholders and taking those views into consideration to amend plans, make decisions or set directions
Dialogue: An exchange of views and opinion to explore different perspectives, needs and alternatives, with a view to fostering mutual understanding, trust and cooperation on a strategy or initiative Corporate Social Responsibility (CSR): A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders. Other terms used to refer to the same concept include CESR (corporate environmental and social responsibility), corporate citizenship and corporate responsibility
Engagement: An organisation’s efforts to understand and involve stakeholders and their concerns in its activities and decision-making processes
Partnerships: In the context of corporate social responsibility interactions, partnership has been defined as “people and organisations from some combination of public, business and civil constituencies who engage in common societal aims through combining their resources and competencies”3 sharing both risks and benefits
Stakeholder: Any group or individual who can affect, or is affected by, an organisation or its activities. Also, any individual or group that can help define value propositions for the organisation
Sustainable Development: First popularised in the 1980s by the Brundtland Commission report, Our Common Future, which proposes that for development to be sustainable it should “meet the needs of the present without compromising the ability of future generations to meet their own needs”
Triple Bottom Line: The idea that the overall performance of a company should be measured based on its combined contribution to economic prosperity, environmental quality and social capital
Useful References
The Doing Business project provides objective measures of business regulations and their enforcement across 189 economies and selected cities at the subnational and regional level.
Resources
Innovation : National Intellectual Property Rights Policy 2016
Financial Code : Draft Indian Financial Code
Company information data : Get Company information
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