Confederation of Indian Industry (CII) has developed a Desirable Corporate Governance Code to develop and promote the Corporate Governance adopted and followed by Indian Companies. State the recommendations of the Code w

Confederation of Indian Industry (CII) took a special initiative on Corporate Governance, the first institutional initiative in Indian Industry. The objective was to develop and promote a code for Corporate Governance to be adopted and followed by Indian companies, whether in the Private Sector, the Public Sector, Banks or Financial Institutions, all of which are corporate entities. The final draft of the said Code was widely circulated in 1997. In April 1998, the Code was released. It was called Desirable Corporate Governance: A Code. It made recommendations in various fields of Corporate Governance like- frequency of Board meetings, composition of Board, number of directorships, non-executive directors, audit committee, etc. Recommendations with regards to Audit Committee made by CII, including for Banks and Financial Institutions, are as follows: Listed companies with either a turnover of over ₹100 crores or a paid-up capital of ₹20 crores should set up Audit Committees within two years. Composition: at least three members, all drawn from a company's non-executive directors, who should have adequate knowledge of finance, accounts and basic elements of company law. To be effective, the Audit Committees should have clearly defined Terms of Reference and its members must be willing to spend more time on the company's work vis-à-vis other non-executive directors. Audit Committees should assist the Board in fulfilling its functions relating to corporate accounting and reporting practices, financial and accounting controls, and financial statements and proposals that accompany the public issue of any security - and thus provide effective supervision of the financial reporting process. Audit Committees should periodically interact with the statutory auditors and the internal auditors to ascertain the quality and veracity of the company's accounts as well as the capability of the auditors themselves. For Audit Committees to discharge their fiduciary responsibilities with due diligence, it must be incumbent upon management to ensure that members of the committee have full access to financial data of the company, its subsidiary and associated companies, including data on contingent liabilities, debt exposure, current liabilities, loans and investments. By the fiscal year 1998-99, listed companies satisfying criterion (1) should have in place a strong internal audit department, or an external auditor to do internal audits.