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PURPOSE OF THE CODE |
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Corporate governance is about commitment to values and
about 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 Satluj Jal Vidyut Nigam 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
and is presently an unlisted, profit making and dividend paying
Company. Although the provisions of the Corporate Governance is
applicable to the Public Limited/Listed Companies, yet, the Company
proposes to adopt and adhere to the best practices of Corporate
Governance. The Corporate Governance philosophy is based on the
following principles: |
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(i) |
Ethical business conduct; |
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(ii) |
Transparency and a high degree of disclosure levels; |
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(iii) |
Truthful communication about how the company is run internally; |
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(iv) |
A simple and transparent corporate structure driven solely by the business
needs; |
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(v) |
Management is the trustee of the shareholders' capital and not the owner. |
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1.0 |
Board of Directors |
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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. |
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1.1 |
Composition of the Board |
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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, removal of 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. |
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1.2 |
Meetings of the Board |
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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. |
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1.3 |
Availability of Information to the Board |
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a) |
Annual operating plans and budgets and any updates; |
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b) |
Capital budgets and any updates; |
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c) |
Quarterly results for the company and its operating divisions or business
segments; |
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d) |
Minutes of meetings of audit committee and other committees of the Board; |
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e) |
The 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; |
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f) |
Show cause, demand, prosecution notices and penalty notices which are
materially important; |
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g) |
Fatal or serious accidents, dangerous occurrences, any material effluent
or pollution problems; |
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h) |
Any material default in financial obligations to and by the Company, or
substantial non-payment for goods sold by the company; |
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i) |
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; |
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j) |
Details of any joint venture or collaboration agreement; |
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k) |
Transactions that involve substantial payment towards goodwill, brand
equity, or intellectual property |
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l) |
Significant labour problems and their proposed solutions.
Any significant development in Human Resources/ Industrial Relations
front like signing of wage agreement, implementation of Voluntary
Retirement Scheme etc.; |
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m) |
Sale of material nature, of investments, subsidiaries, assets, which is
not in normal course of business; |
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n) |
Quarterly details of foreign exchange exposures and the
steps taken by management to limit the risks of adverse exchange
rate movement, if material; |
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o) |
Non-compliance of any regulatory, statutory nature or listing requirements
and shareholders service such as non-payment of dividend, delay in share
transfer etc. |
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2.0 |
Board Committees |
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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 these 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 either 2
members or one third of the members of the Committee, whichever is
higher. |
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2.1 |
Audit Committee |
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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 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. |
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Responsibilities & Powers |
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The Audit Committee shall have the following responsibilities and powers : |
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(a) |
to investigate any activity within its terms of reference |
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(b) |
to seek information from any employee |
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(c) |
to obtain outside legal or other professional advice |
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(d) |
to secure attendance of outsiders with relevant expertise, it considers,
necessary |
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(e) |
to report the matters to such authorities as it considers necessary |
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The role of the audit committee shall be as under : |
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(a) |
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. |
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(b) |
Recommending to the competent authority for removal of statutory auditor, |
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(c) |
Recommending to the competent authority on audit fee and also approval for
payment of Fee for any other service by the statutory auditor. |
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(d) |
Appointment of internal auditors and fixation of Fee. |
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(e) |
reviewing with management the annual financial statements before
submission to the board, focusing primarily on: |
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i) |
Any change in accounting policies and practices |
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ii) |
Major accounting entries based on exercise of judgment by
management |
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iii) |
Qualifications in draft audit report |
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iv) |
Significant adjustments arising out of audit |
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v) |
The going concern assumption |
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vi) |
Compliance with accounting standards |
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vii) |
Compliance with stock exchange and legal requirement concerning
financial statements |
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viii) |
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. |
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(f) |
Reviewing with the management, external and internal auditors, the
adequacy of internal control systems. |
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(g) |
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. |
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(h) |
Discussions with internal auditors on any significant findings and follow
up thereon. |
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(i) |
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. |
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(j) |
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. |
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(k) |
reviewing the company's financial and risk management policies. |
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(l) |
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. |
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(m) |
any other activity as the Audit Committee thinks fit to review which is in
the best interests of the organisation. |
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2.2 |
Remuneration Committee |
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The Remuneration Committee shall address all 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. The Committee is formed under the Chairmanship of
Independent Director. 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. |
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2.3 |
Investment Committee |
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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 Board of Directors. |
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2.4 |
Share Allotment and transfer Committee |
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The Committee shall address Share Allotment to the shareholders and
Transfer of Shares of the Nominees of the President of India. The
Committee shall consists of CMD and one more functional Director as
approved by the Board. At present the entire share capital is held by
the Government of India and Government of H.P. in the ratio of 75:25. |
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2.5 |
Empowered Committee |
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The Committee shall address the contractual matters in exercise of the
powers as 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. |
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3.0 |
Annual Report |
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The Annual Report shall, inter alia, comprise, as far as applicable and
relevant, the particulars as specified in the Companies Act, SEBI
guidelines 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. |
