COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
As a Tata Company, the Company's philosophy on Corporate Governance is founded upon a rich legacy of fair, ethical and transparent governance practices, many of which were in place even before they were mandated by adopting the highest standards of professionalism, honesty, integrity and ethical behavior. As a global organization, the Corporate Governance practices followed by the Company and its subsidiaries are compatible with international standards and best practices. Through the Governance mechanism in the Company, the Board along with its Committees undertakes its fiduciary responsibilities to all its stakeholders by ensuring transparency, fairplay and independence in its decision making.
The Corporate Governance philosophy is further strengthened with the adherence to the Tata Business Excellence Model as a means to drive excellence and the Balanced Scorecard methodology for tracking progress on long term strategic objectives. The Tata Code of Conduct, which articulates the values, ethics and business principles, serves as a guide to the Company, its directors and employees is also supplemented with an appropriate mechanism to report any concerns pertaining to non-adherence to the said Code. The Company is in full compliance with the requirements of Corporate Governance under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the SEBI Listing Regulations"). The Company's Depositary Programme is listed on the New York Stock Exchange and the Company also complies with US regulations as applicable to Foreign Private Issuers (non-US companies listed on the US Exchange) which cast upon the Board of Directors and the Audit Committee onerous responsibilities to improve the Company's operating efficiencies. Risk management and the internal control process focus areas continue to meet the progressive governance standards.
The Company has adopted Governance Guidelines on Board Effectiveness based on current and emerging best practices from both within and outside the Tata Group of companies. These guidelines inter alia incorporate and go beyond corporate governance requirements prescribed under the Companies Act, 2013 ("Act") and the SEBI Listing Regulations.
The Secretarial Audit Report by a Practicing Company Secretary on the Audit undertaken of the Company's secretarial records in respect of compliance with the applicable provisions of the Act, the SEBI Listing Regulations and other applicable regulations and guidelines issued by the Securities and Exchange Board of India for the period under review is a part of the Annual Report.
BOARD OF DIRECTORS
The Board of Directors along with its Committees provide leadership and guidance to the Company's management, as also direct, supervise and control the performance of the Company. The Board currently comprises of 11 Directors out of which 8 Directors (72%) are Non-Executive Directors, including 1 women director. The Company has a Non-Executive Chairman and the 6 Independent Directors comprise more than half of the total strength of the Board. All the Independent Directors have confirmed that they meet the 'independence' criteria as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations and Section 149(6) of the Act.
All the Directors have made necessary disclosures regarding their directorships as required under Section 184 of the Act and on the Committee positions held by them in other companies. None of the Directors on the Company's Board hold Directorships in more than 20 companies, including 10 public companies and none of the Directors of the Company are related to each other. In accordance with Regulation 26 of the SEBI Listing Regulations, none of the Directors are members in more than 10 committees or act as chairperson of more than 5 committees [the committees being, Audit Committee and Stakeholders Relationship Committee] across all listed entities in which he/she is a Director. All Non-Executive, Non Independent Directors, excluding the 'Steel' Director (Tata Steel representative) and the CEO & Managing Director of the Company, are liable to retire by rotation. The appointment of the Managing Director and Executive Directors, including the tenure and terms of remuneration are also approved by the members at the first meeting after the said appointment.
The required information, including information as enumerated in Regulation 17(7) read together with Part A of Schedule II of the SEBI Listing Regulations is made available to the Board of Directors, for discussions and consideration at the Board Meetings. The Board reviews the declaration made by the CEO & Managing Director and the Group Chief Financial Officer (CFO) regarding compliance with all applicable laws on a quarterly, basis as also steps taken to remediate instances of non-compliance, if any. Pursuant to Regulation 27(2) of the SEBI Listing Regulations, the Company also submits a quarterly compliance report on Corporate Governance to the Indian Stock Exchanges including details on all material transactions with related parties, within 15 days from the close of every quarter. The CEO & Managing Director and the CFO have certified to the Board upon inter alia, the accuracy of the financial statements and adequacy of internal controls for financial reporting, in accordance with Regulation 17(8) read together with Part B of Schedule II of the SEBI Listing Regulations, pertaining to CEO and CFO certification for the Financial Year ended March 31, 2016.
During the year under review, 10 Board Meetings were held on April 23, 2015, May 26, 2015, July 10, 2015, August 7, 2015, September 18, 2015, November 6, 2015, January 18, 2016, February 11, 2016, February 23, 2016 and March 30, 2016. The maximum time-gap between any two consecutive meetings did not exceed 120 days.
All the agenda papers for the Board and Committee meetings are disseminated electronically on a real-time basis, by uploading them on a secured online application, specifically designed for this purpose, thereby eliminating circulation of printed agenda papers. The composition of the Board, attendance at Board Meetings held during the Financial Year under review and at the last Annual General Meeting (AGM), number of directorships (including Tata Motors), memberships/chairmanships of the Board and Committees of public companies and their shareholding in the Company as on March 31, 2016 (including Tata Motors Ltd.) are as follows:
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- Excludes Directorships in private companies, foreign companies, Section 8 companies and alternate directorships.
- Includes only Audit and Stakeholders Relationship Committees
- Is also the 'Steel' Director, being a nominee of Tata Steel Limited as per Article 127 of the Articles of Association of the Company.
- Appointed as the CEO & Managing Director of the Company with effect from February 15, 2016.
- Excludes 1 meeting attended as an invitee on February 11, 2016.
As per Regulation 25(1) of the SEBI Listing Regulations, none of the Independent Directors serve as Independent Directors in more than 7 listed entities and in case they are whole-time directors in any listed entity, then he/she does not serve as an Independent Director in more than 3 listed entities.
The Company actively uses the facility of video conferencing permitted under Section 173(2) of the Act, read together with Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014, thereby saving on the cost to the Company and optimally utilising the valued time of the Directors.
Annual Independent Directors Meeting: During the year under review, an annual Independent Directors meeting in accordance with the provisions of Section 149(8) read with Schedule IV of the Act and Regulation 25(3) and 25(4) of the SEBI Listing Regulations, was convened on March 30, 2016, wherein all Independent Directors were present, to review the performance of the Non-Independent Non-Executive Directors including the Chairman of the Board and performance of the Board as a whole. The Non- Independent Directors did not take part in the meeting.
Board effectiveness Evaluation: Pursuant to the provisions of Regulation 17(10) of the SEBI Listing Regulations and the provisions of the Act, Board evaluation involving evaluation of the Board of Directors, its Committees and individual Directors, including the role of the Board Chairman, was conducted during the year. For details pertaining to the same kindly refer to the Board's Report.
Familiarisation Programme: Kindly refer to the Company's website for details of the familiarisation programme for Independent Directors in respect of their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters.
THE COMMITTEES OF THE BOARD
The Board has constituted a set of Committees with specific terms of reference/scope, to focus effectively on the issues and ensure expedient resolution of diverse matters. The Committees operate as empowered agents of the Board as per their Charter/terms of reference. Targets set / actions directed by them as agreed with the management are reviewed periodically and mid-course corrections are also carried out. The Board of Directors and the Committees also take decisions by circular resolutions which are noted at the next meeting. The minutes of the meetings of all Committees of the Board are placed before the Board for discussions/noting. An Organisation Chart depicting the relationship between the Board of Directors, the Committees and the senior management functions, as on March 31, 2016, is illustrated below:
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*The CEO & Managing Director chairs the Excom and Business Committees
** associated member of Excom