DCA TAKES STEPS FOR PROMOTING GOOD CORPORATE GOVERNANCE
meeting convened by the Secretary, Department of Company Affairs
(DCA), Shri Vinod Dhall, here yesterday, matters relating to development
of a comprehensive framework for ensuring and promoting good corporate
governance were discussed. The representatives who took part were
from the professional institutes, industry associations and Securities
and Exchange Board of India (SEBI). It discussed functioning of
audit committee, interface between audit committee and the board
of directors, confining the proceedings against directors within
the definition of "officers in default", sitting fees
of directors and inclusion of insurance premium in calculating
Shri Vinod Dhall stated that the importance
of good corporate governance could hardly be over emphasized.
He said that keeping in view the recent experiences for building
up confidence, particularly of the investors and public at large,
it was essential that the relative roles of various players and
regulating agencies be clearly defined. DCA as the mother body
was to play its role in regulating the corporate sector, facilitating
and coordinating the other regulating agencies to play their role
effectively, he added.
The issues relating to the functioning of
the audit committee, need for giving immunity to independent directors
in the audit committee on the lines of nominee directors of financial
institutions, advisability of enhancing the remuneration package
of directors by way of enhanced limits for sitting fee and commission,
apart from enhancing the quality of directors responsibility statement
were the thrust areas in the discussions.
The interface between audit committee and
the board of director, the binding nature of audit committee’s
recommendations on the board of directors and the need for maintaining
the supremacy of the boards were amongst other issues which engaged
the attention of the participants. The need for complying with
the requirements of clause 49 of the Listing Agreement in letter
and spirit with a view to achieving better standards of corporate
governance was also emphasized.
The need for confining the proceedings against
directors with reference to the definition of "officers in
default" under Section 5 of the Companies Act was also mentioned
by a few of the participants. In this respect, difficulties in
identifying "independent directors" in the audit committee
were also brought out. Apprehensions were also raised by the members
in regard to treatment of insurance premium as a perquisite in
the hands of the directors concerned both with reference to the
applicability of Section 269/Schedule XIII of the Companies Act
and the income tax angle.
It was decided that the
issues relating to sitting fees of directors and inclusion of
insurance premium in calculating remuneration would be looked
into by DCA and suitable steps taken in this regard.