key takeaways of kotak committee report on corporate...

Key Takeaways of Kotak

Committee Report on

Corporate Governance

Gaurav N Pingle,

Practising Co. Secretary, Pune.

Pune Chapter of ICSI – Study Circle . Nov. 18, 2017

Recent boardroom battles,

Recent Corporate practices,

IDs – Change in Role & Liabilities,

Cos.Act, 2013 – CG provisions

Brief background to

Corporate Governance Reforms

Pune Chapter of ICSI (Study Circle). Nov. 18, 2017 . Presentation by

CS Gaurav Pingle

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Members & their Experience,

Deliberations,

Outcome

Brief background of the Kotak Committee

on Corporate Governance


CS Gaurav Pingle

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Format of the Report


CS Gaurav Pingle

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Terms of Reference


CS Gaurav Pingle

• Ensuring independence in spirit of Independent Directors

• ID’s active participation in functioning of the Co.

• Improving safeguards & disclosures pertaining to RPTs

• Issues in accounting & auditing practices by listed Cos.

• Improving effectiveness of Board Evaluation practices

• Addressing issues faced by investors on voting & participation in general meetings

• Disclosure and transparency related issues, if any

• Any other matter, as the Committee deems fit

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Broad Contents of the Report


CS Gaurav Pingle

Composition and Role of the Board of

Directors

The Institution of Independent Directors

Board CommitteesEnhanced Monitoring

of Group Entities

Promoters/Controlling Shareholders and

Related Party Transactions

Disclosures and Transparency

Accounting and Audit related issues

Investor Participation in Meetings of Listed

Entities

Governance Aspects of Public Sector

EnterprisesLeniency Mechanism

Capacity building in SEBI for Enhancing

Corporate Governance in Listed

Entities

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Chapter I: Composition & Role of BoD


CS Gaurav Pingle

Minimum No. of Directors

Gender Diversity

Attendance of Directors

Disclosures of Expertise

NED – Age limit

Minimum No. of Board Meetings

Updation of Knowledge of Board Members

Quorum for Board Meeting

Separation of Non – Executive Chairperson and MD / CEO

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Chapter II: Institution of Independent Directors


CS Gaurav Pingle

Minimum No. of IDs

Eligibility Criteria for IDs

Minimum Compensation to

IDs

Disclosures on Resignation of IDs

Induction & Training of IDs

Alternate Directors for ID

Lead ID in Cos. with Non-

independent Chairperson

Casual Vacancy of Office of ID

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Chapter III: Board Committees


CS Gaurav Pingle

Minimum Number of Committee Meetings

Role of Audit Committee

Role / Constitution of Nomination & Rem. Committee

Composition & Role of StakeholdersRelationship Committee

Quorum for Committee Meetings

Applicability & Role of Risk Management Committee

Information Technology Committee

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Chapter IV: Enhanced Monitoring

of Group Entities


CS Gaurav Pingle

Obligation on BoD of

Listed Entity w.r.t.

Subsidiaries.

(ICSI Report referred)

Secretarial Audit

(i) SA may be made compulsory for all listed entities under SEBI LODR

Regulations in line with Cos. Act,

(ii) SA may also be extended to all material unlisted Indian subsidiaries.

This is in line with the theme of strengthening group oversight and

improving compliance at a group level.

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Chapter V: Promoters / Controlling shareholders


CS Gaurav Pingle

• Sharing of Info. with Controlling Promoters / Shareholders with Nominee Directors

• Re-classification of Promoters / Classification of Entities as Professionally Managed

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Chapter V: Related Party Transactions


CS Gaurav Pingle

Disclosures of RPTs

Approval of RPT

Materiality Policy

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… Chapter V: Related Party Transactions


CS Gaurav Pingle

Remuneration to ED (Promoter)

Remuneration to ED (Non-Promoter)

Remuneration to NED (Promoter)

Remuneration to NED (Non-Promoter)

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Chapter VI: Disclosures &Transparency


CS Gaurav Pingle

• Submission of Annual Reports

• Searchable Formats of Disclosures

• Harmonization of Disclosures – Avoiding the risk of Disclosure arbitrage

• Disclosures Pertaining to Disqualification of Directors – Certificate of Practising CS

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Disclosures Pertaining to Disqualification of

Directors – Certificate of Practising CS


CS Gaurav Pingle

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Certificate from Company Secretary in practice that none ofthe directors on the board of the company have beendebarred or disqualified from being appointed or continuingas directors of the companies by the SEBI / MCA or any suchauthority.

What is contemplated to check:

Debar or Disqualify,

From being appointed or continuing as Directors

SEBI / MCA or any such authority.

Accounting & Audit-related issues


CS Gaurav Pingle

Audit Qualifications

Independent External Opinion

by Auditors

Quarterly Financial Disclosures

Disclosure of Reasons of

Resignation of Auditors

Disclosures on Audit & Non-audit Services Rendered

by Auditor

Disclosures of Credentials and

Audit Fee of Auditors

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Powers of ICAI vis-à-vis SEBI

Strengthening Monitoring & Enforcement by SEBI


CS Gaurav Pingle

Powers of SEBI w.r.t. Auditors & Other Statutory 3rd Party

Fiduciaries for Listed Entities

Strengthening the Role of ICAI

Strengthening the Independent

Functioning of Quality Review

Board

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Chapter VIII: Investor Participation in Meetings

of Listed Entities


CS Gaurav Pingle

Timeline for Annual General

Meetings of Listed Entities

E-voting and Webcast of

Proceedings of the Meeting

Resolutions sent to Shareholders without Board’s

Recommendation

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Establish a transparent mandate for PSEs and

disclose its objectives & obligations;

Ensure independence of PSEs from

Administrative Ministry,

Consolidate the Govt. stake in listed PSEs

under holding entity structure(s)

Chapter IX: Governance Aspects of

Public Sector Enterprises


CS Gaurav Pingle

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Committee felt that Leniency Programme would improve

effective detection of violations and enhance ease of

investigation and enforcement, while also acting as a

deterrent that could result in an increase in the overall

compliance of securities regulations;

Committee felt that SEBI may be empowered to grant

leniency and offer protection against victimisation to whistle-

blowers in certain instances determined on case by case basis

Chapter X: Leniency Mechanism


CS Gaurav Pingle

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Committee recommended enhancing SEBI’s

capacity in line with global best practices:

Enhance No. & skill-sets of its human resources;

Exploit power of data science & technology; and

Strategically work with other agencies,

especially for monitoring and enforcement.

Chapter XI: Capacity building in SEBI for Enhancing

Corporate Governance in Listed Entities


CS Gaurav Pingle

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Deliberation on the Key Takeaways22


CS Gaurav Pingle

Q & A Session


CS Gaurav Pingle

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CS Gaurav Pingle

Thank you Pune Chapter of ICSI for this wonderful

opportunity!!

Thank you Students & Members for active

participation!!

(E): [email protected]

(W): www.csgauravpingle.com

(M): +91 9975565713

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mailto:[email protected]

http://www.csgauravpingle.com/

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