Good Governance For Sustainability

Responsibility of a Company SecretaryProf. Suman K MukerjeePrincipal and DeanBharatiya Vidya Bhavan Instt. of Management Science

Administrative ResponsibilitiesWhat you see depends on where you sit

The Modern Society is a society of Different Organisations.There is need for comprehensive freedom in order to function properlyUse freedom in the right way.Ensuring Company Law and Articles of Association.Personal liability Default - knowing or deliberate

Keep thy shop and shop will keep thee- George ChapmanCorporations are not only business enterprises, they shape values of our societyUnderstand clearly the rights, roles, responsibilities and accountability .Optimise business performanceEnsure continuous disclosure of material information financial & non-financial

Management implies joy for living - take work as joy

Good CG will improve market capitalisation of Indian companies, thereby reducing cost of capitalLarge number of retail investors with limited knowledge requiring stringent investor protection.Public holdings are widely dispersed so that shareholders have little power on their own.

From functional to cross sectional to holistic

Holistic GDP = Economic GDP + Social GDP(HDI) + Psycho spiritual GDP ; The need is scale neutral MSMEs to large enterprisesInformation asymmetry - between institutional and retail investorsRegulatory regime still evolving on insider trading, market manipulations, relevant disclosures etc.Foreign Portfolio Investors will demand more transparency and greater disclosure from Indian Companies

CEO Creative, Enlightment & Organic New Clause 49 has been incorporated in the listing agreement that deals with - Board of Directors- Audit Committees- Remuneration Committee of the Board- Board Procedures- Management - Shareholders - Report on Corporate Governance- ComplianceDuty & DescriptionCompliance with internal regulations & Ligislation

Checking the company complies with :Memorandum & Articles of Association and that these are up to dateThe Companies Act 1985Companies and other legislation

Duty & DescriptionMaintenance of records

Keeping the companys statutory books and records, including registers of

Mortgages and chargesDirectors and secretaryDirectors interestsMembersDebenture holders

Duty & DescriptionAdministration of board and general meetings

Procedural compliance and administration in :

Preparing and sending out notices Taking minutes of meetings and keeping the minute books

Duty & DescriptionFilling forms etc. at companies House

This must be done in the time limits given. Particular importance is attached to filling company accounts and returns, together with notices of changes to registers, especially charges.Duty & Description Collation of accounts and compliance with legislation

Shareholder communications

Ensuring that the companys accounting records are :

Maintained in accordance with company legislationPrepared in timeIn the form required by company law ad accounting standardsCopies of the accounts are distributed to the appropriate persons within the correct time constraints.

Not applicable to a charitable company limited by guarantee.

Duty & Description :Access to records

Ensuring that eligible persons can review company records and that the company is compliant with the Data Protection ActDuty & DescriptionLegal Advice

Share administration

Advising directors on their legal responsibilities and updating them on developments in the law concerning the running of companies

Not applicable to a charitable company limited by guarantee

Duty & DescriptionInformation Link

Maintaining communication links between

Directors and non-executive directorsShareholders and the boardEmployees and the boardMedia / press and the company

Duty & DescriptionRunning the registered office

Administering the registered office

Dealing with correspondenceReceipt and care of official documentsMaking documents required by law available for inspection by third parties

Duty & DescriptionSecurity of documentation

Managing the security of

Company sealCertificate of incorporationCertificate(s) on change of nameMemorandum and Articles of AssociationDirectors service contractsShare certificates and stock transfer formsOther documents of title.Value Addition throughStability and growthBuilds confidenceReduces perceivded risks, consequenty reducing cost of capitalLeverage a competitive advantage in the final marketLong terms sustenance of stakeholders relationshipA good corporate citizen becomes an icon and enjoys a position of prideStakeholders aspire to enter into relationships with enterprises whose governance credentials are exemplary.

A self regulatory mechanismsBasic regulations and best practices will be effective when tailored to the individuals enterprise with reference to the stage of development, specific needs and the legal, economic, social and cultural environment it operates in.If the trumpet gives an uncertain sound, who will prepare for the battle?Management SAW= Science (practical), Action, Wisdom (tacit/explicit)Integrity of the managementAbility of the boardAdequacy of the processCommitment level of individual broad membersQuality of corporate reportingParticipation of stakeholders in the management

How is knowledge created ? Looking around

Performance evaluation 3H= Head + Heart + HandNormative Responsibility of Corporations

Socio-Economic Development

Three Forms of Corporate ResponsibilityEconomic Responsibilities of CorporationsActing in accord with the logic of competitive marketing and respecting the principle of shareholder democracyPolitical responsibilities of Corporations abiding by legitimate law, respect for the system of rights and principle of constitutional state.Social responsibilities of Corporations understands itself or promotes itself either as a community with shared values or as a part of larger community.Factors in Promoting Corporate Responsibilities to Socio-economic DevelopmentObjective FactorsTechnical knowledgeManagerial skillsKnowledge of locals community needsKnowledge of development planning

Subjective FactorsPragmatic motivations ST (cost)- Name recognition- Goodwill - Marketing opportunities- Increased company moraleEthical motivations - LT (they are and want to be )- sense of individual identity- sense of common identity

Custodian of good of Good GovernanceGood governance is not merely a protective edge. It is a cutting edge.It is not recommended because it is good for the shareholders and other state holders. It is essential because it is good for the company itself in the present competitive environment.Corporate performance in a competitive environment requires dynamism and positive activism. The boar should remain unified and decisive.Minority shareholders have a right to hones and fair dealings. They should be adequately protected from mismanagement, oppression and misrepresentation.Good corporate governance is therefore not about avoiding risks, it is about managing them effectively.

Some Reflections Corporate governance is necessary even essential for the companys own benefit nor merely for the benefit of the shareholders and the stakeholders.The purpose of business is not safety and security it is adventure with reasonable security.Subject of the risk management is critical to good governance in a competitive environment.Doctrinaire fallacy i) Firstly : Protection of minority shareholders. This is important but it is not a function of good governance. It is a matter of separate protection by the Companies Act against protection of minority shareholders. It is also necessary to protect the majority shareholders against the unjust and unfair expectations of the minority.Some Reflections (Contd..)Doctrinaire fallacyii)Secondly : The shareholders should be given some part in management of the company. This is also quite illogical since the shareholders have themselves assigned the right of management to the directors.iii)Thirdly : Board should not become a debating society rather than an instrument of effective and decisive action. iv)Fourthly : Should be transparency. CG is about preserving a reasonable fair balance between transparency on the one hand and the need for the secrecy on the other.Some Reflections (Contd..)About ethicsWe need Ethics for success. There is no ethics in failure even if failure is achieved honestly and transparently. Let us not excuse failure almost as a manifestation of ethical behaviour.The medium and small sectors also need good corporate governance even more than the large sector.Good corporate governance is need not only by profit making enterprises but in the social and non-profit sectors like schools, colleges, universities , hospitals and municipalities need good corporate governance perhaps even to a greater extent.

Some Reflections (Contd..)Corporate governance ownership from management and control. Banks and financial institutions to ask for promoters personal guarantee. Personal risk exposure can not be reconciled with personal exclusion from management. If you insist on personal guarantee you must expect and accept personal involvement.If shareholders are to distance themselves from management, this must also be true in the case of the public sector i.e. MPs must not exercise management rights from the back seat on the basis that they are representing the real owner.

Rules, Evolve and RevolveRotation can be a positive force (swastik )High self esteem or a negative force ( invereted swastik) Low self esteemFreedom from stress ; (1) renunciation / restraint (2) accommodation ( Kshanti) (3) Equanmity (samadittavam) (4) Contentment (santosh)We have witnessed three revolutions - (1) industrial revolution (2) service revolution (3) knowledge revolutionFrom efficiency to effectiveness to excellenceIndividual to enterprise to culture

Self reverence, self knowledge, self control these three alone lead life to sovereign power- Alfred TennysonRevolutionise two meanings (a) Fundamental Change (b) Completed RotationRevolutionise Your BusinessRevolutionise Your CultureRevolutionise How Innovative Creates ProsperityRevolutionise The Society In Which You Operate

Boldness in business is the first , second and third thing Thomas FullerBuild company profits on responsible action and skillCreate business models based on sharing and caring Identify role models who combine thought work and deed.Develop young talent driven by human values and bring them to business The brain is not a sex organ therefore, there can be no gender bias or glass ceilings.

Business underlies everything in our national life including spiritual life witness the fact in the Lords prayer. The first petition is for our daily bread. No one can worship God or love his neighbour on an empty stomach Woodraw Wilson 1912THANK YOU

Email : sumankmukerjee@gmail.com