Professional Documents
Culture Documents
(Lesson-9: BECG)
Contents
This deals with:1. Structure and Composition of the Board 2. Styles of Directors 3. Roles, Functions, Duties, Responsibilities and Liabilities of Directors 4. Executive Management Process 5. Functional Committees of Board 6. Investor Services and Investor Protection Measures
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(a) Types of Board: Executive Directors (Hold positions of both Director and Executive of an organization) Non-Executive Directors (They dont hold executive positions & are outside directors without promoters link) Nominee Directors (of Banks, FIs, major shareholders) Representative Directors (Similar to Nominees but represent stakeholder groups like employees, customers) Alternate Directors (Substitutes to Original Directors) Shadow Directors (They influence Board without being 3 formally present on the Board)
All-Executive Board (It will have all Executive Directors only and no outside directors E.g. Family-owned businesses and subsidiaries) Majority Executive Board ( Executive Directors will have a majority and Outside Directors represent interests of stakeholder groups like major shareholders, employees, customers, Banks, FIs etc.) Majority Outside Board (This will have a majority of outside, Non-Executive Directors) Two-Tier Supervisory Board (It addresses the concerns for separating Executive Management from Non-Executive Directors. It has two separate Boards: The Non-Executive Supervisory Board and the Executive Management Board. The former monitors the plans/performance of the latter).
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2. Styles of Board
C. Styles of the Board (Grid):
Depending on the way the Boards function, their commitment to effective decision making and concern for interpersonal relations, the Boards may be categorized as: Rubber Stamp Boards (Gives little importance to good interpersonal relations or decision making. Board ratifies whatever decisions CEO takes. Ex. Subsidiary Cos.) Representative Boards (They accord high priority to effective decision making and less or no priority to good interpersonal relations among board members) County Club Boards (Maintain cordial interpersonal relations but concern for decision making is least) Professional Boards (Give high importance to both interpersonaal relations and effective decision making)
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2. Conformance Role : (In this, the director is concerned with ensuring that the company follows the policies and procedures laid down by the board. This is done thru executive management and involves monitoring and evaluating their own performance. The independent evaluation of top managements performance overcomes the danger of adoption of a narrow vision of the executive board.
Responsibilities to shareholders (Through policies and proceedings and monitoring top managements performance) Obligation to maintain honesty and integrity. To give the shareholders regular reports and accounts, besides being honest with the shareholders in their dealings and decisions that will benefit the organization.
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3. Roles, Functions, Duties, Responsibilities and Liabilities of Directors (contd.) (e) Liabilities of Directors: 1. Misrepresentations in offer documentations and annual accounts 2. Failure to refund subscription monies to investors 3. Contravention of Law
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The Executive Management of a company is generally comprised of the Chief Executive, Executive Directors, and the Key-Managers involved in day-to-day management of the company. They are professionals with substantial experience in the concerned professional areas in related industries, both within India and across the world ( in case of MNCs). The executive management team is guided in the execution of the Company's strategy by the Board of Directors comprising individuals who have distinguished themselves in the private and public sectors. It directly reports to the Board and administers the day-today affairs of the company as per the powers delegated to 13 it by the Board.
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Investor Services include share registration and other related services. Generally, the Investor Service Centers (ISCs), operated by a dedicated and trained team of professionals backed by state-of-theart infrastructure, are registered with SEBI as Share Transfer Agents. ISCs shall have a very high degree of control in respect of compliance with statutory and regulatory requirements and a very effective and efficient Complaint Redressal Mechanism. ISCs deal with the share related matters, including Dematerialization, Rematerialization, Transfer, Transmission of Shares, Sub-division or Consolidation of Shares, Issue of Duplicate Share Certificates, Dividend etc, or for redressal of any grievance in this regard.
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Guidelines on advertisement Guidelines for Issue of Debt Instruments Guidelines for Book-Building Guidelines for Issue of IPOs by designated DFIs. Guidelines for Preferential Issues Guidelines for OTCEI issues Guidelines for Bonus Issues Operational Guidelines Miscellaneous
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MOU between Lead MB and Issuer Co. Inter Se Allocation of Responsibilities Due Diligence Certificate to be given by Lead Merchant Banker Promoters Contribution & Lock-in Period Formats of Due Diligence Certificates Financial Statements (P&L, B/S, Tax Shelter Statement, Capitalization Statement) Formats of Auditors Statement for Profit Forecast
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Some Important Schedules to SEBI (Disclosure & Investor Protection) Guidelines (contd.)
Basis for Issue Price Post Issue Monitoring Reports Underwriting Devolvement Statement Basis for Allotment Procedure Format to Reporting Agency Book Building Model Draft and Final Offer Documents Format Formats of Hly. Reports to be submitted by MBs (The End)
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