1.

Suggest how can family controlled companies be made to practice

corporate governance?
Family ownership may be seen as an opportunity or a threat, depending on a variety of factors. Investorsboth shareholders and creditorsmay look with distrust on familycontrolled companies, because of the risk that the controlling family may abuse the rights of other shareholders. Thus, investors likely will scrutinize such companies with care before taking the plunge and investing. The family ownership and commitment to the business may be understood as adding value, provided that the company and the controlling family can respond to the concerns of the investor community. There is a long and storied history of family-owned companies with highly-concentrated ownership, poor transparency and absence of accountability and fairness principles that led to abuse of minority shareholder rights. From an investor perspective, the key is to establish the right corporate governance conditions so that the positive aspects of family ownership are coupled with assurances that investor interests will be recognized and addressed. 2. Discuss the role of SEBI in furthering the cause of CG 3. The Securities and Exchanges Board of India has introduced a rigorous regulatory regime to ensure fairness, transparency and good practice. Brokers must disclose to the Stock Exchange, immediately after trade execution, the name of the client and other trade details, and the Exchange must then disseminate this information to the general public on the same day. The new environment of improved transparency, fairness, and efficient regulation led BSE to become a transparent electronic limit order book market in 1996, with an efficient trading system similar to the NSE. Equity and equity derivatives trading in India has skyrocketed to record levels over the last ten years. Currently, about 5000 companies are listed and traded on NSE and/or BSE. While the dollar value of trading on the Indian stock exchanges is much lower than the dollar value of trading in Europe or the United States, it is important to note that the number of equity trades on BSE/NSE is about ten times greater than that of Euronext or the London Stock Exchange, and of the same order of magnitude as that of NASDAQ and the New York Stock Exchange. Similarly, the number of derivatives trades on NSE is several times greater than that of Euronext or London, and is comparable to US derivatives exchanges provides a summary comparison in this regard. The number of trades is an important indicator of the extent of investor interest and participation in equities and equity trading, and provides important incentives for improving corporate governance practices in India. Enforcement of corporate laws remains the soft underbelly of Indias legal and corporate governance systems. The World Banks 2004 Reports on the Observance of Standards and Codes (ROSC) finds that while India observes or largely observes most of the principles, it could do

better in many areas, including the use of nominee directors, the enforcement of laws and regulations pertaining to stock listing on major exchanges, insider trading, and dealing with violations of the Companies Act. Some of these problems arise because of unsettled questions about jurisdictional issues and powers of the SEBI. 3. How can Indian organizations to develop an image that positions them as

well-governed enterprises that protect the minority stakeholders interests on an ongoing basis?
SEBI has placed a discussion paper on its website entitled Proposed modifications to the existing framework for buy back through open market purchase for public comments. The merchant bankers should be advised to ensure that a minimum of 50% of the maximum buyback proposed/disclosed to be bought back. It is proposed that companies complete the buy back in 3 months. To ensure that only serious companies launch the buyback program, it is further proposed that these companies be mandated to put 25% of the maximum amount proposed for buyback in an escrow account. It is proposed that listed companies coming out with buyback programs may not be allowed to raise further capital for a period of two years. In order to ensure that the companies do not launch buyback programs for stabilizing the share price, it is proposed that companies who are not able to buy back 100% of the proposed amount (or the proposed maximum number of shares) may not be allowed to come with another buyback for a period of at least one year irrespective of the mode of approval for buy back. It is also proposed that buy-back of 15% or more of (paid up capital + free reserves) must be only by way of a tender offer method. It is proposed that the issuance of shares pursuant to obligations arising out of Employee Stock Option schemes may be allowed during the buy-back period subject to the following: (a) the shares are not allotted to directors and key managerial personnel of the company; (b) there is no acceleration in the vesting period. It is proposed that the companies shall extinguish/ destroy shares bought back during the month, on or before fifteenth day of the succeeding month subject to the companies destroying the bought back shares in the last month within seven days of the completion of the offer. The current regulations prohibit the promoters of the company in dealing in the securities of the company during the period when buy back is open. It is proposed to extend this restriction to dealing in the securities of the company offmarket as well.

4. What aspects of social, economic and environmental responsibilities can be included in the corporate governance report to show how the entities have responded on these essential aspects? Economic:
Financial performance is fundamental to understanding an organization and its own sustainability. However, this information is normally already reported in financial accounts. What is often reported less, and is frequently desired by users of sustainability reports, is the organizations contribution to the sustainability of a larger economic system. The economic dimension of sustainability concerns the organizations impacts on the economic conditions of its stakeholders and on economic systems at local, national, and global levels. The Economic Indicators illustrate: Flow of capital among different stakeholders; and Main economic impacts of the organization throughout society.

Environmental
Covers performance related to biodiversity, environmental compliance, and other relevant information such as environmental expenditure and the impacts of products and services. The environmental dimension of sustainability concerns an organizations impacts on living and non-living natural systems, including ecosystems, land, air, and water. Environmental Indicators cover performance related to inputs (e.g., material, energy, water) and outputs (e.g., emissions, effluents, waste). In addition, they provide a concise disclosure on the Management Approach items outlined below with reference to the following Environmental Aspects: Materials; Energy; Water; Biodiversity; Emissions, Effluents, and Waste; Products and Services; Compliance; Transport; and Overall.

Social Performance Indicators:

The social dimension of sustainability concerns the impacts an organization has on the social systems within which it operates. Society Performance Indicators focus attention on the impacts organizations have on the local communities in which they operate, and disclosing how the risks that may arise from interactions with other social institutions are managed and mediated. The GRI Social Performance Indicators identify key Performance Aspects surrounding labor practices, human rights, society, and product responsibility. In particular, information is sought on the risks associated with bribery and corruption, undue influence in public policy-making, and monopoly practices. Community members have individual rights based on:

Universal Declaration of Human Rights; International Covenant on Civil and Political Rights; International Covenant on Economic, Social and Cultural Rights; and Declaration on the Right to Development.