Corporate Governance Report
"Directors and managements must take upon themselves to improve accountability by setting a “tone at the top”, honoring the responsibilities that arise from the trust placed in them by investors. All directors and managements should implement their own best practices for corporate governance that promote integrity, transparency and accountability."
Elisse B. Walter, Commissioner, U.S. Securities and Exchange Commission, remarks before the Practicing Law Institute, New York, February 18, 2009
Corporate governance is about commitment to values and ethical business conduct. It is a set of laws, regulations, processes and customs affecting the way a company is directed, administered, controlled or managed. This includes its corporate and other structures, culture, policies and the manner in which it deals with various stakeholders. Some of the important best practices of corporate governance framework are timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the Company.
Corporate governance guidelines and best practices have evolved over a period of time. The Cadbury Report on the financial aspects of corporate governance, published in the United Kingdom in 1992, was a landmark. Over the past decade, various countries have issued recommendations for corporate governance. Compliance with these are generally not mandated by law, although codes that are linked to stock exchanges sometimes have mandatory provisions. The Sarbanes-Oxley Act of 2002 brought about sweeping changes in financial reporting. In India, the Confederation of Indian Industry (CII) took the lead in framing a desirable code of corporate governance in April 1998. This was followed by the recommendations of the Kumar Mangalam Birla Committee on Corporate Governance. The recommendations of the Kumar Mangalam Birla Committee were incorporated as Clause 49 of the Listing Agreement.
Securities and Exchange Board of India (SEBI) instituted a committee under the chairmanship of N. R. Narayana Murthy which recommended enhancements in corporate governance. SEBI incorporated the recommendations made by the Narayana Murthy Committee on Corporate Governance in Clause 49 of the Listing Agreement. The revised Clause 49 has been made effective from January 1, 2006.
Following the recent financial upheaval, the National Association of Software and Service Companies (NASSCOM) is set to focus on good corporate governance and ethics among its member companies. NASSCOM has constituted a Corporate Governance and Ethics Committee headed by N. R. Narayana Murthy.
The objectives of the committee are to strengthen the existing appropriate code of ethics, values and corporate code of conduct for the industry; emphasizing existing regulations and practices on corporate governance and re-drafting and re-affirming appropriate code of ethics, values and corporate code of conduct for the industry. The committee will work with authorities, policy makers and regulators in the areas of corporate governance and transparency.
We believe that sound corporate governance is critical to enhance and retain investor trust. Accordingly, we always seek to ensure that we attain our performance rules with integrity. Our Board exercises its fiduciary responsibilities in the widest sense of the term. Our disclosures always seek to attain the best practices in international corporate governance. We also endeavor to enhance long-term shareholder value and respect minority rights in all our business decisions.
Our corporate governance philosophy is based on the following principles:
- Satisfy the spirit of the law and not just the letter of the law. Corporate governance standards should go beyond the law
- Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose
- Make a clear distinction between personal conveniences and corporate resources
- Communicate externally, in a truthful manner, about how the Company is run internally
- Comply with the laws in all the countries in which we operate
- Have a simple and transparent corporate structure driven solely by business needs
- Management is the trustee of the shareholders' capital and not the owner.
The Board of Directors is at the core of our corporate governance practice and oversees how the Management serves and protects the long-term interests of all our stakeholders. We believe that an active, well-informed and independent Board is necessary to ensure highest standards of corporate governance.
The majority of our Board, eight out of 15, are independent members. Further, we have audit, compensation, investor grievance, nominations, and risk management committees, which comprise only independent directors.
As a part of our commitment to follow global best practices, we comply with the Euroshareholders Corporate Governance Guidelines, 2000, and the recommendations of The Conference Board Commission on Public Trusts and Private Enterprises in the U.S. We also adhere to the United Nations Global Compact policy. Further, a note on our compliance with the corporate governance guidelines of six countries in their national languages is presented in the Corporate governance report - Australia, Canada, France, Germany, Japan and United Kingdom section of the Annual Report.
Corporate governance ratings
CRISIL
CRISIL assigned us the "CRISIL GVC Level 1" rating. This Governance and Value Creation (GVC) rating indicates our capability to create wealth for all our stakeholders while adopting sound corporate governance practices.
ICRA
ICRA assigned "CGR 1" rating to our corporate governance practices. The rating is the highest on ICRA's Corporate Governance Rating (CGR) scale of CGR 1 to CGR 6. We are the first Company in India to be assigned the highest CGR by ICRA. The rating reflects our transparent shareholding pattern, sound Board practices, interactive decision-making process, high level of transparency, disclosures encompassing all important aspects of our operations and our track record in investor servicing. A notable feature of our corporate governance practices is the emphasis on substance over form, besides our transparent approach to follow such practices.
Corporate governance guidelines
Over the years, the Board has developed corporate governance guidelines to help fulfill our corporate responsibility to various stakeholders. These guidelines ensure the Board will have the necessary authority and processes in place, to review and evaluate our operations when required. Further, these guidelines allow the Board to make decisions that are independent of the Management. The Board may change these guidelines from time-to-time to effectively achieve our stated objectives.
- Australia
- Canada
- France
- Germany
- Japan
- United Kingdom