Code of Corporate Governance
PURPOSE OF THE CODE
Corporate governance is about commitment to values and ethical business conduct. It is about how an organization is managed. Timely and accurate disclosure of information regarding the financial situation, performance, and governance of the company is an
important part of corporate governance. This improves public understanding of the activities and policies of the organization. Consequently, the organization is able to attract investors, and to enhance the trust and confidence of the stakeholders. The SJVN
Limited is a Joint Venture of Government of India and Government of Himachal Pradesh. The Company was Incorporated on 24th May 1988 as a Private Limited Company. The Company which has record of profit making and dividend paying is now a Listed Company with
NSE and BSE since 20th May 2010 with the divestment of Government of India’s equity to the extent of 10.03% of the paid capital. The Listing Agreement(s) and Guidelines of Department of Public Enterprises underlines the observance of Corporate Governance norms.
We, at SJVN adopt in letter and spirit the principles of Corporate Governance and our philosophy is based on the following principles
- Ethical business conduct;
- Transparency and a high degree of disclosure levels;
- Truthful communication about how the company is run internally;
- A simple and transparent corporate structure driven solely by the business needs;
- Management is the trustee of the shareholders' capital and not the owner.
1. Board of Directors
The Company believes that at the core of its corporate governance practice is the Board, which oversees how the management serves and protects the long-term interests of all the stakeholders of the company. An active, well-informed and independent board
is necessary to ensure the highest standards of corporate governance.
1.1 Composition of the Board
The Board of Directors of the Company shall comprise of an optimum and desirable combination of Full time Directors, official Part-time Directors and Independent Directors. The Company being a Government of India Enterprise, the powers to appoint, remove
the Directors on the Board vests with the Government of India. For adequate representation of the Independent Directors on the Board, SJVNL shall always make efforts. The Chairman of the Board shall be Chairman and Managing Director of the Company.
As regards Membership in a Standing Committee, No Director shall be a member of more than 10 committees or act as Chairman of more than five committees across all companies in which he is a Director. The Directors shall inform the Company annually as to
their other Directorships/Chairmanships and shall promptly notify the Company of changes, if any.
1.2 Meetings of the Board
The Board shall meet at least six times a year (including on the occasion of the Annual General Meeting of the shareholders of the Company) with a maximum time gap of 3 months between any two meetings. The dates of the Board Meetings shall be informed well
in advance to all the Members of the Board. Directors shall be expected to attend at least 50% Board meetings in a year.
1.3 Availability of Information to the Board
The Board shall have access and complete information within the Company. As far as the Items of Business to be placed before the Board, the SJVNL to the extent applicable shall place the matters as per the Secretarial Standards (SS-I) of the Institute of
Company Secretaries of India and as enumerated in the Listing Agreement(s). Broadly, the matters are:
- Annual operating plans and budgets and any updates;
- Capital budgets and any updates;
- Quarterly results for the company and its operating divisions or business segments;
- Minutes of meetings of audit committee and other committees of the Board;
- TThe information on recruitment and remuneration of senior officers just below the Board level, including appointment or removal of Chief Financial Officer and the Company Secretary;
- Show cause, demand, prosecution notices and penalty notices which are materially important;
- Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems;
- Any material default in financial obligations to and by the Company, or substantial non-payment for goods sold by the company;
- Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have
negative implications on the Company; j. Details of any joint venture or collaboration agreement;
- Details of any joint venture or collaboration agreement;
- Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property
- Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like signing of wage agreement, implementation of VRS etc.;
- Sale of material nature, of investments, subsidiaries, assets, which is not in normal course of business;
- Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material;
- Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.
2. Board Committees
It is the general policy of the Company that the Board of Directors shall consider all major decisions.
The Board is responsible for constituting, assigning, co-opting and fixing terms of service for the Committee Members of various Committees and delegate powers to the Committees. Recommendations of the Committees shall be submitted to the full Board for
approval wherever called for.
The frequency and agenda of meetings of each of these Committees shall be determined by the Chairman of the Board in consultation with the Chairmen of the concerned Committees. The Committees shall meet as and when the need arises. The quorum of the meetings
shall be as determined under each Committee.
2.1 Audit Committee
The primary objective of the Audit Committee of the company is to monitor and provide effective supervision of the management's financial reporting process with a view to ensure accurate, timely and proper disclosures and transparency, integrity and quality
of financial reporting.
The Audit Committee will also from time to time as may be required oversee the work carried out in the financial reporting process by the management, including the internal auditor and the statutory auditor and shall take note of the processes and safeguards
employed by each. The Audit Committee shall have the power to investigate any activity within its terms of reference, seek information from any employee when necessary and obtain external legal or professional advice from experts when necessary
The Audit Committee shall be a qualified and independent Audit Committee comprising minimum three directors as members. Two-thirds of the members of Audit Committee shall be independent directors. The members of the Audit Committee shall be financially literate.
At least one member shall have accounting or related financial management knowledge. The Company Secretary shall be the Secretary of the Audit Committee. The quorum shall be either two members or one third of the members of the audit committee whichever is
greater, however, there shall be a minimum of two independent members present.
2.2 Responsibilities & Powers
The Audit Committee shall have the following responsibilities and powers
- to investigate any activity within its terms of reference
- to seek information from any employee
- to obtain outside legal or other professional advice
- to secure attendance of outsiders with relevant expertise, it considers, necessary
- to report the matters to such authorities as it considers necessary
The role of the audit committee shall be as under :
- oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
- Recommending to the competent authority for removal of statutory auditor,
- Recommending to the competent authority on audit fee and also approval for payment of Fee for any other service by the statutory auditor.
- Appointment of internal auditors and, Cost Auditors and fixation of Fee.
- reviewing with management the financial statements, cost audit reports before submission to the board, focusing primarily on:
- Any change in accounting policies and practices
- Major accounting entries based on exercise of judgment by management
- Qualifications in draft audit report
- Significant adjustments arising out of audit
- The going concern assumption
- Compliance with accounting standards
- Compliance with stock exchange and legal requirement concerning financial statements
- Any related party transaction, ie., transactions of the company of material nature, with the management, their subsidiaries or relatives, etc., that may have potential conflict with the interests of company at large.
- Reviewing with the management, external and internal auditors, the adequacy of internal control systems
- Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit.
- Discussions with internal auditors on any significant findings and follow up thereon.
- Reviewing the findings of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control of a material nature and reporting the matter to the board.
- Discussion with external auditors before the audit commences, nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
- reviewing the company's financial and risk management policies.
- to look into the reasons for substantial defaults in the payment to the depositors, shareholders (in case of non-payment of declared dividends) and creditor.
- any other activity as the Audit Committee thinks fit to review which is in the best interests of the organisation.
2.3 Remuneration Committee
The Remuneration Committee shall address all proposals of Human Resources including proposals relating to Pay and Allowances of employees of the Organisation as per the instructions/directions issued from time to time by the Department of Public Enterprises
and place all such proposals requiring the approval of the Board, before the Board with its recommendations. The Committee is formed under the Chairmanship of Independent Director. The other Members of the Committee shall be one from nominee Directors of the
Governments and one more Independent Directors. The Functional Directors, namely, Director (Personnel) and Director (Finance) shall be Special Invitees. The quorum for the Meeting shall be 2 members or one-third of the Members of the Committee whichever is
higher. The Company Secretary shall be the Secretary of the Committee. The Committee shall meet as and when the need arises.
2.4 Investment Policy Committee
The Investment Policy Committee shall address Policy Matters of Company’s Investment and advice the Investment Committee in its functions from time to time. The Committee is headed by Independent Director. The Committee consists of one Member representing
Government of India on the Board and one Member representing Govt. of H.P. on the Board and Director (Finance) of the Company. The Quorum for the Meeting is two Members. The Company Secretary shall be the Secretary of the Committee. The Committee shall meet
as and when the need arises.
2.5 Investment Committee
The Investment Committee shall address investment of surplus funds in term deposits with Banks in accordance with the instructions of the Government of India and as per the guidelines approved by the Board of Directors. The Committee shall consist of CMD,
Director (F) and one more functional Director as approved by the Board. A report on the Investments made and loans obtained for working capital needs is placed quarterly before the Audit Committee and Board of Directors.
2.6 Committee for Allotment and Post Allotment Activities
The Committee shall address Share Allotment, issue of certificates, letter of allotment, transfer, transmission, rematerialisation, issue of duplicate certificates, consolidation, split and any other related functions. The Committee consists of CMD and two
Functional Directors. The Quorum for a Meeting shall be two Members.
2.7 Empowered Committee
The Committee shall approve the contractual matters in exercise of the powers entrusted to the Committee by the Board in its 173rd Meeting held on 30th August 2008. The Committee consists of CMD and all Functional Directors. The Quorum for the Committee
consists of CMD, Director (F) and concerned Director.
2.8 Investor Grievance Committee
The Committee shall address interalia, Investors Complaints pertaining to non-allotment of shares, transfer or transmission of shares, debentures or any other securities, Non receipt of declared dividends, balance sheets of the Company, etc; and Carrying
out any other function contained in the Listing Agreement as and when amended from time to time. The committee consists of two Independent Directors and Chairman-cum-Managing Director, SJVN Limited. The quorum for the meeting shall be two Members.
2.9 Annual Report
The Annual Report shall, inter alia, comprise, as far as applicable and relevant, the particulars as specified in the Companies Act, SEBI guidelines, Listing Agreement(s) with NSE and BSE, and relevant Secretarial Standards on Board’s Report issued by the
Institute of Company Secretaries of India including the information in the "Corporate Governance" section