corporate governance – Page 7 – Vinod Kothari Consultants

Delegation of the power to invest – absolute or conditional?

September 28, 2023/0 Comments/in Companies Act 2013, corporate governance, Corporate Laws /by Nitu Poddar

– Nitu Poddar | corplaw@vinodkothari.com

As per section 186(5), any investment has to be approved by the board in its meeting by all the directors present in the meeting. First proviso to section 179(3) allows delegation of power of the board with respect to investing the funds of the company. This power can be delegated to a committee of directors / MD / manager or any principal officer. Are these two provisions contradictory? No, delegation allowed in section 179 is to remove bottlenecks in terms of activities being carried out by the company in its day-to-day operations. There are several investment opportunities which are available only at opportune times. If these opportunities have to wait for the board meeting to happen, the very opportunity may be lost. Also, companies need to ensure that they do not sit with idle funds. For this, they are often required to make investment decisions – investments which are non-strategic, short term and have to be reinvested soon enough.

G20/OECD’s Corporate Governance Principles, 2023

September 18, 2023/0 Comments/in corporate governance /by Team Corplaw

Ankit Singh Mehar, Executive | corplaw@vinodkothari.com

The G20 leaders in the recent G20 Summit held on 8th -10th September, 2023, endorsed the revised ‘G20/OECD Principles of Corporate Governance’ (‘Revised Principles’). The Revised Principles replace the extant set of principles released in 2015 in light of the evolution in capital markets and global economy, following a review of the erstwhile principles over a period from 2021-2023.

As stated in the Summit Declaration, the Revised Principles have been endorsed by the G20 leaders “with the aim to strengthen policy and regulatory frameworks for corporate governance that support sustainability and access to finance from capital markets, which in turn can contribute to the resilience of the broader economy.”

The Revised Principles, besides making alterations to the existing principles, also introduce two new chapters, viz.,

Chapter III – ‘Institutional investors, stock markets, and other intermediaries’ focussing on engagement of institutional investors with the investee company, essential disclosure requirement and management of conflict of interest pursuant to exercise of their key ownership rights.

Chapter VI – ‘Sustainability and resilience’ focussing on corporate governance policies for managing the risks and opportunities of sustainability and resilience

Below we summarise the key highlights of the Revised Principles.