Over the past decades, the technology and information revolutions have fundamentally transformed economic and political relationships between nations. Thanks to the opening up of financial markets across the globe, investors today have a wide choice of capital markets to invest in. Consequently, the global investor must have access to information about the performance of any company, in any market that he or she chooses to invest in. However, differences in language, accounting practices, and reporting requirements in various countries render performance reports by many companies rather investor-unfriendly.
Today, the strength of a global company lies in its ability to access high-quality capital at the lowest cost from a global pool of investors. Such companies study the needs of global investors and publish financial information in a language and form understood by their existing as well as prospective investors. In the process, financial statistics may have to be restated and financial terminology may need to be translated. Indeed, a key issue in international financial analysis is the restatement and translation of financial reports that describe operations conducted in one environment, but which are the subject of review and analysis in another.
The International Financial Reporting Standards (IFRS) have gained significant momentum across the globe. Many countries have adopted IFRS and some of them, including India, are in the process of adopting the same. The U.S. Securities and Exchange Commission (SEC) permits foreign private issuers to file financial statements in accordance with IFRS without any reconciliation with U.S.GAAP. We have fully adopted IFRS as issued by International Accounting Standards Board for our filings with SEC, effective March 31, 2009. Extracts from the audited IFRS financial statements have been presented in the Extract of audited IFRS financial statements section of the Annual report. Audited IFRS statements are available in our Annual Report on Form 20-F, filed with SEC for the year ended March 31, 2010. The details are also available on our website www.infosys.com.
Australia, France, Germany and United Kingdom have adopted IFRS. We are presenting extracts of the unaudited consolidated financial statements for these countries presented in substantial compliance with IFRS in their respective local currencies. Canada is in the process of adopting IFRS in full with effect from the year 2011. Canadian GAAP financial statements have been presented on the same basis as earlier years. Financial information presented in Japanese GAAP in this annual report has been translated from our audited IFRS financial statements. The information will be included in the Securities Report to be filed with the Ministry of Finance, Japan. Further, keeping in mind their local regulations and practices, these countries have formulated their own corporate governance standards. We have provided statements on substantial compliance with these standards in the respective national languages of these countries.
The unaudited consolidated Balance Sheets and Income Statements, excluding notes to the financial statements, have been presented by converting the various financial parameters, reported in our consolidated Balance Sheets and Income Statement, into the respective currencies of the above countries. In addition, appropriate adjustments have been made for differences, if any, in accounting principles, and in formats, between India, these countries and IFRS.
The Australian Stock Exchange (ASX) Corporate Governance Council (The Council) was formed on August 15, 2002 to develop and deliver an industry-wide, support framework for corporate governance which could provide a practical guide for listed companies, their investors, the wider market and the Australian community. The Council published its First edition - "principles of good corporate governance and best practice recommendations" (First edition) in March 2003. The Council undertook an extensive review of the First edition and issued a revised corporate governance principles and recommendations (Second edition Corporate Governance Guidelines) in August 2007. The corporate governance principles and recommendations of the council are not mandatory, but Australian listed entities must disclose those principles that are not in compliance and the reasons for non-compliance.
The council proposed eight core principles which it believes underlie good corporate governance. We comply substantially with all recommendations made by the council, except the following:
Recommendation 2.2: The Chair should be an independent director: The current policy of the Company is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and to separate the board functions of governance and management. The Board consists of 14 members, five of whom are executive or full-time directors, one is non-executive and eight are independent directors. Mr. N. R. Narayana Murthy, who is the non-executive member of the Board, is our Chairman and Chief Mentor. Further, Prof. Marti G. Subrahmanyam has been appointed as the lead independent director.
|2.||Recommendation 5.1: Ensure compliance with ASX listing rule disclosure requirements:We are not listed on the Australian Stock Exchange. However, we have established necessary policies and procedures to ensure that announcements are made in a timely manner, are factual, do not omit any material information and are expressed in a clear and objective manner that allows investors to assess the impact of the information when making investment decisions.|
|3.||Recommendation 7.3: Declaration in relation to the listed entity’s financial statements by Chief Executive Officer (CEO) and Chief Financial Officer (CFO) provided in accordance with section 295A of the Corporation Act: We are not listed on the Australian Stock Exchange and hence this recommendation is not applicable to the company. However, our CEO and CFO provide necessary certifications with respect to the company’s financial statements and internal controls. The certification is provided in compliance with the Indian and U.S. regulatory requirements.|
In December 2003, the Toronto Stock Exchange (TSX) issued guidelines which would help issuers prepare meaningful disclosure that complies with its requirements. TSX only requires companies to explain their practices, and not to adopt the practices in the guidelines. These guidelines were updated in January 2006.
We substantially comply with all the recommendations.
Les principes de la gouvernance d’entreprise des sociétés cotées tirent leur origine des rapports VIENOT de juillet 1995 et juillet 1999, des rapports BOUTON de septembre 2002, janvier 2007 et octobre 2008 sur les recommandations concernant la rémunération des dirigeants des sociétés cotées. Cet ensemble de recommandations fut préparé par des groupes de travail de l’Association Française des Entreprises Privées (AFEP) et le Mouvement des Entreprises de France (MEDEF). Cette « consolidation » des travaux menés par des présidents de grandes sociétés françaises constitue une réponse à la communication de la Commission Européenne sur la gouvernance d’entreprise et le droit des sociétés, qui préconise que chaque Etat membre désigne un code de référence auquel les sociétés devront se conformer ou expliquer en quoi leurs pratiques diffèrent et pour quelles raisons.
Ce rapport avait fait plusieurs recommandations. Notre société se conforme strictement à ces recommandations, à l’exception des points ci-dessous :
7.1 La représentation des salariés et des salariés actionnaires - La politique actuelle de la société est d’avoir 14 membres au conseil. Dans ce conseil, 8 sont des directeurs indépendants, 1 un directeur non-cadre et 5 des directeurs cadres. De ces directeurs cadres, 3 sont des directeurs fondateurs et 2 sont des directeurs employés.
14.2.1. Revue des comptes par un comité d’audit - La société a un comité d’audit qui comprend 4 directeurs indépendants. Tous les membres du comité sont des financiers et un membre est l’expert financier. Le comité se réunit au moins une fois chaque trimestre (un jour avant la réunion du conseil d’administration) pour revoir et examiner les états financiers.
17. Déontologie pour les directeurs - La législation locale des entreprises ne demande pas que les directeurs détiennent personnellement des actions de la société. Cependant, la plupart des directeurs, excepté un, détiennent personnellement des parts de la société.
Der Deutsche Corporate Governance Kodex beinhaltet ein Regelwerk für den Vorstand und den Aufsichtsrat von in Deutschland börsennotierten Unternehmen. Diese Regeln dienen der Verbesserung der Transparenz und dem Verständnis des deutschen Corporate Governance Systems. Der Kodex soll bei internationalen und nationalen Investoren, Kunden, Mitarbeitern und der Öffentlichkeit das Vertrauen in den Vorstand und den Aufsichtsrat börsennotierter Unternehmen fördern.
Dieser Kodex gibt Empfehlungen. Die Gesellschaft beachtet die Empfehlungen der Regierungskommission, mit folgenden Abweichungen:
Empfehlungen 3, 4 und 5 – Das duale Führungssystem von Gesellschaften – Die Gesellschaft hat ein einheitliches Leitungsorgan, das mit geschäftsführenden und überwachenden Funktionen ausgestattet ist. Derzeit besteht das einheitliche Leitungsorgan aus 14 Direktoren, davon sind 5 geschäftsführende Direktoren (Geschäftsführer), 1 nicht geschäftsführender Direktor und 8 überwachende Direktoren.
The combined code on corporate governance supersedes and replaces the combined code issued in 2003. It follows a review by the Financial Reporting Council of the implementation of the code in 2007 and subsequent consultation on possible amendments to the code. This new code is applicable for reporting years beginning on or after June 29, 2008.
We substantially comply with all recommendations of the combined code except for the following:
Code A.3.1 – Board balance and independence: The independent directors annually affirm their independence as per the definition of the Indian and U.S. listing rules. The Board of Directors also annually determine the independence of these directors. The local listing rules too prescribe a maximum tenure of nine years for an independent director to serve on a company’s board. The rule was effective January 2006. None of our independent directors have served for more than nine years from the date of the rule becoming effective.
|2.||Code A.5.1 – Induction on joining the board: All new non-executive directors inducted into the Board are given an orientation. Presentations are made by various executive directors giving an overview of our operations to familiarize the new non-executive directors with the operations. The new non-executive directors are given orientation on our services, group structure and subsidiaries, our constitution, Board procedures and matters reserved for the Board, our major risks and risk management strategy.|
|The Board’s policy is to have separate meetings regularly with independent directors to update them on all business-related issues and new initiatives. In such meetings, the executive directors and other members of the senior management make presentations on relevant issues.|
|3.||Code B.1.4 – Remuneration Policy: The Company has a policy to allow its executive directors to serve on the board of two other business entities with the prior consent of the Chairperson of the Board of Directors. Remuneration earned by virtue of such board membership is retained by the directors concerned.|
|4.||Code D1 – Dialogue with institutional investors: Our communication policy addresses the needs of all investors. We use various forums to communicate with our investors and share long-term and short-term plans, as well as our corporate strategies. As a policy, we do not differentiate between small and large investors. Non-executive directors do not meet with large investors as required under the code.|
|5.||D.1.1. and D.1.2: The CEO, COO, CFO, members of the Executive Council and the Investor Relations team meet investors on a regular basis to understand their views/perspectives. The Company also has a practice of conducting analyst meets both in India and overseas. Views obtained from investors/analysts during the course of such meetings are communicated to the Board of Directors at the ensuing board meeting|
The financial information provided in this section is unaudited. Financial information presented in substantial compliance with the GAAP requirements of countries and IFRS may not meet all the regulatory requirements to be characterized as financial statements presented in explicit and unreserved compliance with such requirements. The statements on compliance or substantial compliance with corporate governance standards of various countries may not meet all the relevant regulatory requirements to be characterized as statements of explicit and unreserved compliance with corporate governance requirements. The financial information provided in this section does not contain sufficient information to allow full understanding of our results or our state of affairs. In the event of a conflict in interpretation, the 'Audited Indian GAAP financial statements’ section and the 'Corporate governance report’ of the Annual Report should be considered. We caution investors that these reports are provided only as additional information to our global investors. Using such reports for predicting our future, or of any other company, is risky. We are not responsible for any direct, indirect or consequential losses suffered by any person using these corporate governance reports, financial statements or data.