IT industry lobby Nasscom on Tuesday announced a new set of guidelines on corporate governance, which the body said would be ideal for even non-listed companies to follow. The recommendations – a collection of best practices – will particularly help smaller companies joining the IT industry avoid a huge learning curve, Nasscom president Som Mittal said.
The committee?s recommendations are structured across the stakeholder ecosystem covering the board of directors, customers, competitors, employees and partners. Detailed guidelines have been incorporated for whistleblower policy and the Ombudsperson concept.
The document stresses on more disclosure of the activities of the board and its committees. It provides guidelines on the responsibilities of various parties to detect fraud and talks at length on the nomination and commitment of independent directors.
?Wherever feasible there should be segregation between the office of the CEO and the chairman of the Board. The chairman of the Board should be a non-executive independent director. In case such segregation cannot be practically achieved, it is recommended that the company has a lead independent director,? the document stated.
The audit committee of the board, it said, must have a minimum of three members, who are all independent non-executive directors. ?The audit committee must monitor that the company has in place a programme for periodic assessment of areas susceptible to fraud. Specifically, the audit committee must review the effectiveness and adequacy of the anti-fraud programmes and controls in the identified areas, including the extent to which these are being covered in internal and external audit plans,? the guidelines stated.
The note further highlights the need for shareholder empowerment?companies should strive to provide information to its shareholders in a manner which is easily accessible. ?Companies must have appropriate systems in place which enables the shareholders to participate effectively and vote in the shareholders? meetings. Shareholders should also be informed of the rules and voting procedures, which govern the general shareholder meetings,? it said. The document also talks of respecting the competitor.
