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Annexure-3
Non-Mandatory
Requirements
A
non-executive Chairman should be entitled to maintain
a Chairman’s office at the company’s expense
and also allowed reimbursement of expenses incurred
in performance of his duties.
The board should set up a remuneration committee to
determine on their behalf and on behalf of the shareholders
with agreed terms of reference, the company’s policy
on specific remuneration packages for executive directors
including pensions rights and any compensation payment.
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To avoid conflicts or interest, the remuneration
committee, which would determine the remuneration
packages of the executive directors should comprise
of at least three directors, all of whom should
be non-executive directors, the chairman of committee
being an independent director.
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All the members of the remuneration committee
should be present at the meeting.
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The Chairman of the remuneration committee should
be present at the Annual General Meeting, to answer
the shareholders queries. However, it would be
up to the Chairman to decide who should answer
the queries.
Shareholder Rights:
The
half-yearly declaration of financial performance including
summary of the significant events in last six-months,
should be sent to each household of shareholders.
Currently,
although the formality of holding the general meeting
is gone through, in actual practice only a small fraction
of the shareholders of that company do or can really
participate therein. This virtually makes the concept
of corporate democracy illusory. It is imperative that
this situation which has lasted too long needs an early
correction. In this context, for shareholders who are
unable to attend the meetings, there should be a requirement
which will enable them to vote by postal ballot for
key decisions. Some of the critical matters which should
be decided by postal ballot are given below :
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Matters relating to alteration in the memorandum
of association of the company like changes in
name, objects, address of registered office etc;
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Sale
of whole or substantially the whole of the undertaking;
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Sale of investments in the companies, where the
shareholding or the voting rights of the company
exceeds 25%;
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Making
a further issue of shares through preferential
allotment or private placement basis;
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Corporate restructuring;
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Entering a new business area not germane to the
existing business of the company;
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Variation in rights attached to class of securities;
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Matters relating to change in management
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