Promotion and Adoption of Responsible Business Practices by Corporates in India

1. Promotion and Adoption of Responsible Business Practices by Corporates in India Shikhar Jain Principal Counsellor Centre of Excellence for Sustainable Development Date – 26 April 2018 The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry or any of its subsidiary.

2. Our Work Roadshows – In cities throughout India Conferences at the National and Federal Level Seminars and Training Programs – General and Customised for the companies Research Papers and Guiding Documents – On various aspects of good corporate governance The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

3. Our Work Policy-dialogue Session Workshop with World Bank Training Program on Risk Management Discussion Points – That cooperative approach is necessary to promote business ethics; That public institutions need to be strengthened for minimising corruption; That civil society should demand ethics from companies; That companies should develop internal monitoring mechanisms; and That inclusive approach within organisation is important, in the stead of dictates being imposed from the top echelons to lower echelons of management; The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

4. Our Work The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

5. Five years back, the CII Committee on Integrity and Transparency in Governance came out with a comprehensive Code of Business Ethics which was recommended to members on a voluntary basis. The Committee this year under my Chairmanship felt the need for a simplified code, which all members would feel comfortable adopting, including the many SMEs in our membership. This simplified Code is attached, and contains the basic principles of doing business ethically. CII Code of Conduct The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

6. Developments in India • Changes to the Companies Act – • Auditor Rotation • Institution of Independent Directors • Vigil mechanism and whistle-blowing mechanism • Mandatory electronic dissemination of information to shareholders • Legislative changes – • Benami Transactions (Prohibition) Amendment Act, 2016 • Amendment to Prevention of Money Laundering Act The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

7. Developments in India • Institutional changes – • Use of technology based good governance mechanism • Use of technology for benefit transfer to target audience • Introduction of Goods and Services Tax • Strengthening cooperative federalism • Making the governance sustainable and minimizing carbon foot print by use of internet of things The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

8. Policy-advocacy In India rapid policy-changes have been introduced. Some major concerns have also been highlighted by committees in the corporate governance. The most recent observations were highlighted last year in the Report on Corporate Governance published under the leadership of MrUday Kotak. The following major points were highlighted and we shall advocate policy-changes in these key areas – That there is need to develop robust mechanism for regulating the group entities and the subsidiaries; That there is need to develop group governance policy or group governance unit which shall ensure transparency in the operation of the group as an entity; That the concept of board evaluation is at a nascent stage in India; That the reports of the companies should be published timely and through electronic medium to augment sustainability; That transparency in understanding a company’s holding structure and voting rights requires disclosure of the holders of the depository receipts The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

9. Policy-advocacy That there is need for harmonized dissemination of disclosures, otherwise there could be a risk of disclosure arbitrage; That in addition to the same, disclosures of disclosure of financial information, significant changes in key financial indicators along with reasons thereof would enable the investors to further comprehend the company’s business and financial performance. The issues highlighted in this report are related to increasing transparency in corporate governance. The Committee has advocated other important areas of reforms such as the audits, institution of directors, related party transactions, etc. We now would work to foster policy-advocacy in these areas for improving corporate governance in the companies. The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

10. Proposed Future Plan Policy-dialogue with the Government and Ministries in India; Integrate the Supply-chain components, especially SMEs into the hierarchy of corporate governance Bring policy-level changes; Conduct customized training programs for companies; and Close collaboration with academic institutes to bring out guiding materials and standardized frameworks. The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.

11. THANK YOU The views and opinions expressed in this presentation are those of the authors and do not represent the official position of Confederation of Indian Industry.