CORPORATE GOVERNANCE

Board of DirectorsRole of the BoardBoard Structures

1. All Executive Board2. Majority Executive Board3. Majority Outside Board4. Two-tier Board

(i) Supervisory Board(ii) Management or Executive Board

Responsibilities of the Board

1. Determination of Board functions.

2. Setting the values, mission and vision.

3. Preparing strategic plan, operating plan and budget.

4. Ensuring adequate resources.

5. Monitoring progress towards achieving the agreed objectives.

Responsibilities of the Board

6. Preparation of a work plan.

7. Mentoring, monitoring and evaluating the Chief Executive.

8. Ensuring compliance and disclosure.

9. Communicating with stakeholders.

The Role of Directors A. The Performance Role

1.Contributing know-how, expertise and information about the external environment.

2.Representing the Company and networking.

B. The Conformance Role3. Judging.4. Questioning the board’s assumptions.5. Surpervising Executive management.

C. The Watchdog Role

D. The Role of a Confidante

The Responsibilities (Liabilities) of Directors

1.Responsibilities to shareholder.2.Duty to act honestly.3.Duty not to make secret profits.4.Duty to exercise reasonable care, diligence

and skill in their work in the board.5.Selection and monitoring of key

executives.6.Review of remuneration.

7. Ensuring a formal and transparent board nomination process.

8. Monitoring and managing potential conflicts of interests.

9. Monitoring the effectiveness of corporate governance practices.

10. Ensuring the integrity of company’s accounting and financial reporting system.

11. Putting in place appropriate control systems.

Board Objectives

1.Business objectives.2.Market Related objectives.3.Financial objectives.4.Technical objectives.5.Compliance objectives.6.Social Responsibility.7.Environmental objectives.

Types of Directors

1.Executive Directors.2.Non-Executive Directors.3.Nominee Directors.4.Representative Directors.5.Associate Director.

Non-Executive Directors – Their Role

1.Infusion of external perspective.2.Role in the formation of company strategy.3.Succession Planning4.Takeovers and Mergers.5.Monitoring.6.Board Meetings.7.Counselor to the Chairman.8.Strengthening of Accountability of

Management to Shareholders.

Nominee Directors - Induction

1.Under the provisions of Term Loans.2.Investments in shares of Private

Companies.3.Large shareholdings by investment

institutions.4.Underwriting developments.

Role of Nominee Director

Structure and Composition of Boards

A.Structure – How to Balance?

1.Representation of Core Management Group.

2.Representation of Independent Elements.

3.Majority Representation.4.Nominees Representation.5.Professional Representation.

B.Composition

1.Skills2.Experience3.Age

What makes Effective Boards

1.Existence of Board as a Team.2.Guarding against the breaking of the

team bond.3.Creation of a climate of trust.4.Foster a culture of open Dissent.5.Allow role switches.6.Ensure Individual Accountability.

Independent Directors – Meaning

How to strengthen them?

1.Appointment.2.Remuneration.3.Human Resources.4.Other areas.5.Periodic review.6.Liability insurance.7.Training of Independent Directors.

8.Disclosure by independent directors.9.Separate meeting of independent

directors.10.Designation of one or more as lead

independent directors.11.Substantial shareholding.

Board Leadership

-Barriers to Effective Board Leadership.1.Time Management.2.Resistance to risk taking.3.Strategic planning.4.Complexity.5.Micro Management.6.Clinging to tradition.7.Confused Roles.8.Past habit.

The Board Chairman and the CEO

Board Chairman – Concept and RoleQualities of Chairman

1.Conceptualiser.2.Character.3.Sound Health.4.Aloofness.5.Listening to criticism.6.Own critic and judge.7.Risk taker.

Functions of the Chairman1.Management Function.2.Approval Function.3.Leadership Function.4.Consultative Function.5.Spokesperson.6.Initiative Function.7.Special Invitees.8.Planning and Running of Meetings.9.Drafting of Minutes.

The CEO and His Role1. Periodical review of systems and

procedures.2.Consultation with Chairman.3.Relations with NEDs.4.Talent recognition.5.Make available for performance review.

Relationship between Chairman and CEO1.Complementing the CEO.2.Directing the CEO.3.Consulting and Coaching the CEO.4.Reviewing and controlling.5.Restricting the power of the CEO.

Separation of Positions of Board Chairman and the CEO.