Infowin Ltd. has been pioneer in corporate governance practices. The Board is comprised of appropriate mix of independent and executive directors to separate Board functions of governance and management. The Board compri

CS Professional · Ethics, Governance and Sustainability · PYQS · June 2016
Infowin Ltd. has been pioneer in corporate governance practices. The Board is comprised of appropriate mix of independent and executive directors to separate Board functions of governance and management. The Board comprises of fifteen members with seven executive directors and eight independent directors. Responsibilities of the Chairman, CEO (Chief Executive Officer) and COO (Chief Operating Officer) have been clearly defined and they have to make periodic presentations before the Board on their responsibilities, targets and performance. The Board is responsible for selection of new directors and it delegates the selection of the new Board members to the Nomination and Remuneration Committee. The Nomination and Remuneration Committee recommends to the Board the induction of any new Board member. The Board also regularly works with the Chairman, CEO and the COO to determine the plans of internal succession of these posts in case of any emergency. The Board meets to review the quarterly results, discusses issues related to the company's financial performance and the shareholders' interests. The independent directors are always kept up to date with the information regarding the company by the Board through separate meetings arranged at regular intervals. The Board currently has five committees namely, Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Investment Committee. The COO and CEO deal with interaction of the Board with the clients, employees, institutional investors, the government and press. The risk management is dealt with by the Board with the help of the Audit Committee. In light of the above, you are required to answer the following questions : (i) How do independent directors on the Board help Infowin Ltd. to formulate best business policies ?

Answer & Explanation:

In the given case, out of fifteen directors in the company, eight are independent directors. The responsibilities of chairman, CEO, COO, CFO are clearly defined and they are required to make presentations to the board on their responsibilities, targets and performances. Independent directors are known to bring an objective view in board deliberations. They also ensure that there is no dominance of one individual or special interest group or the stifling of healthy debate. They act as the guardians of the interest of all shareholders and stakeholders, especially in the areas of potential conflict of interest. Independent Directors bring a valuable outside perspective to the deliberations. They contribute significantly to the decision-making process of the Board. In addition, they can play an important role in areas where the interest of management, the company and shareholders may converge such as executive remuneration, succession planning, changes in corporate control, audit function etc. Independent directors are required because they perform the following important role: Balance the often conflicting interests of the stakeholders. Facilitate withstanding and countering pressures from owners. Fulfil a useful role in succession planning. Act as a coach and mentor for their full time colleagues. Provide independent judgment and wider perspectives. Thus, the presence of independent director on the board of Infowin Ltd. will lead to greater transparency in company's dealings and formulation of best policies.

Topics: Corporate Governance

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