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PART - B - BOARD SYSTEM AND PROCEDURE

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 BORD COMMITTEE
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Board process
Check that the minimum number of directors in a company is complied with i.e. there are at least two / three directors

Check that .the maximum limit of number of directors is restricted to fifteen directors, In case the company has excee
maximum limit has it has passed special resolution for the same and has filed form MGT-14 with ROC

In case the company is a listed public company check for optimum combination of executive and non-executive direc
the Board of Directors comprise of not less than fifty percent non-executive directors (NEDs)

In case the company falls under following category, check that the company has appointed at least one woman directo
(i) every listed company;
(ii) every other public company having -
(a) paid—up share capital of one hundred crore rupees or more; or
(b) turnover of three hundred crore rupees or more.

In case the company is a listed public company check :

1. Where the Chairman of the Board is a NED, at least one-third of the Board comprises of independent directors.
2. Where the company does not have a regular non-executive Chairman, at least half of the Board comprises of indep
directors. Where the regular non-executive Chairman is a promoter of the company or is related to any promoter or pe
management positions at the Board level or at one level below the Board, at least one-half of the Board of the compan
independent directors.

In case the company falls under following category check if company has appointed at least two directors as independ
(i) the Public Companies having paid up share capital of ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred crore rupees or more; or
(iii) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore
(iv) in case a company covered under the relevant rule is required to appoint a higher number of independent director
composition of its audit committee, such higher number of independent directors shall be applicable to it.

Ensure that all the independent directors meet the qualifying criteria, for the purpose check the declaration given by e
independent director to the board.
 Check the formal letter of appointment given to independent dirrector available on company's website and the stock e
ensuring compliance with remuneration paid to independent director.

As per Companies Act, 2013

An independent director shall not be entitled to any stock option and may receive remuneration by way of fee, reimbu
expenses for participation in the Board and other meetings and profit related commission as may be approved by the m

As per amended Clause49:

All fees / compensation, if any paid to non-executive directors, including independent directors, shall be fixed by the
Directors and shall require previous approval of shareholders in general meeting. The shareholders' resolution shall sp
for the maximum number of stock options that can be granted to non-executive directors, in any financial year and in
Provided that the requirement of obtaining prior approval of shareholders in general meeting shall not apply to payme
fees to non-executive directors, if made within the limits prescribed under the Companies Act, 2013 for payment of si
without approval of the Central Government.

In case of a listed company check if small shareholders have demanded that their representative should be elected to t
If yes ensure that one person who himself is a small shareholder is elected as a director by small shareholders upon no
than one thousand small shareholders or one-tenth of the total number of such shareholders, whichever is lower, have
shareholders' director elected by the small shareholders.
Check that such director representing small shareholders is not subjected to retirement by rotation and he is not holdin
in more than two companies.
Check that the person is not appointed as such for three consecutive years.
Check that at least one director of the company has stayed in India for a total period of not less than 180 days in previ
year.
ART - B - BOARD SYSTEM AND PROCEDURE
Check that the company held its first meeting in 30 days of incorporation and a , minimum number of four meetings o
Directors during the year in such a manner that not more than one hundred and twenty days shall intervene between tw
meetings of the Board.

Check that the notice in writing was sent to every director at his address registered with the company either by hand d
post or by electronic means.
In case meeting of the Board was called by giving not less than seven days' ensure that at least one independent direct
present at the meeting.
In case of absence of independent directors from such a meeting of the Board, check that decisions taken at such a me
circulated to all the directors and are ratified by at least one independent director, if any.

Check that the notice of the meeting informs that the director regarding the option available to participate through vid
mode or other audio visual means, and also provide information on all the necessary information to enable the directo
through video conferencing mode or other audio visual means.
Check that following matters were not dealt through video conferencing or other audio visual means in board meeting
(i) the approval of the annual financial statements;
(ii) the approval of the Board's report;
(iii) the approval of the prospectus;
(iv) the Audit Committee Meetings for consideration of accounts; and
(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Check that the quorum for a meeting of the Board of Directors of a company was one third of its total strength or two
whichever is higher, and the participation of the directors by video conferencing or by other audio visual means were
for the purposes of quorum.
Check that the independent directors of the company held at least one meeting in a year, without the attendance of no
directors and members of management.
Check that in separate meeting of independent directors they reviewed the performance of non-independent directors
as whole and reviewed the performance of the Chairperson of the company, taking into account the views of executiv
non-executive directors.
Check that every listed company and every other public company having a paid up share capital of twenty five crore r
calculated at the end of the preceding financial year has in its Board's report made a statement indicating the manner i
annual evaluation has been made by the Board of its own performance and that of its committees and individual direc

Check that every director discloses his concern or interest in any company or companies or bodies corporate (includi
interest), firms or other association of individuals, by giving a notice in writing in Form MBP-1,at the first meeting of
which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever
change in the disclosures already made.

Ensure that interested director did not participate when such contract or arrangement was taken up for discussion and
counted for the quorum for the same.
Check that all material transactions with related parties have been disclosed quarterly along with the compliance repo
governance.
Check that the company has formulated a policy on dealing with Related Party Transactions and the same is disclosed
and also in the Annual Report.
Check that the Related Party Transactions were approved by the Audit Committee at the first available instance.
All material Related Party Transactions have been approved by the shareholders through special resolution and the re
abstained from voting on such resolutions.
Check that the Board periodically reviews compliance reports of all laws applicable to the company, prepared by the
well as steps taken by the company to rectify instances of non-compliances.
Check that the Board of the company satisfies itself that plans are in place for orderly succession for appointments to
to senior management.
The Nomination and Remuneration committee is responsible to Identify persons who are qualified to become director
be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appo
removal.

Check that the minutes of board/ committee meetings are properly maintained in accordance with the Act.
 BORD COMMITTEE
Ensure that a director is not a member in more than ten committees or act as Chairman of more than five committees
companies in which he is a director.

Check where the company falls under any of the following categories:
(i) a listed company;
(ii) all public companies with a paid up capital of ten crore rupees or more on the date of last audited Financial Statem
(iii) all public companies having turnover of one hundred crore rupees or more on the date of last audited Financial St
(iv) all public companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding f
or more on the date of last audited Financial Statements.
If yes, check that the Board of directors have constituted an Audit Committee and a Nomination and Remuneration li
the Board
Check that the audit committee consists of a minimum of three directors with a majority of independent directors. In c
company Two-thirds of the members of audit a committee shall be independent directors. Ensure that the board's repo
composition of an audit committee.
Check that the majority of members of Audit Committee including its Chairperson are persons with ability to read an
the financial Statement.
In case of listed company all members of audit committee shall be financially literate and at least one member shall h
or related financial management expertise.
Check whether the Chairman of the Audit Committee is an independent director and that the Chairman of the Audit C
present at Annual General Meeting to answer shareholder queries.
Check that the Audit Committee of the company if any, in consultation with the Internal Auditor, has formulated the s
functioning, periodicity and methodology for conducting the internal audit.

Check where the company falls under any one of the following categories :
(i) a listed company;
(ii) a company which accepts deposits from the public;
(iii) a company which has borrowed money from banks and public financial institutions in excess of fifty crore rupees
If yes, check that the company has constituted vigil mechanism for their directors and employees to report their genui
grievances.

Check that the terms of reference (in addition to other items) of audit committee ensures overseeing the vigil mechani
company.
Check that the Audit Committee has met. at least four times in a year and not more than four months have elapsed bet
meetings.
Ensure that the quorum of audit committee is maintained i.e. either two members. or one third of the members of the
whichever is greater, but there should be a minimum of two independent members present.
Check that any recommendation of the audit committee which are not accepted by the Board are disclosed in the Boa
Check that the Nomination and Remuneration Committee consists of at least three or more non-executive directors ou
less than one-half are independent directors.
Check whether the Chairman or a member of the nomination and remuneration committee was present at the Annual
Meeting, to answer the shareholders' queries.
Check whether the Chairman or a member of the nomination and remuneration committee was present at the Annual
Meeting, to answer the shareholders' queries.
Check the annual report for the disclosure of the remuneration policy relating to the remuneration of the directors, key
personnel and other employees and the evaluation criteria of independent directors.
Check that where a company consists of more than one thousand shareholders, debenture-holders, deposit-holders an
security holders at any time during a financial year has constituted a Stakeholders Relationship Committee consisting
chairperson who shall be a non-executive director and such other members as may be decided by the Board.
Check whether the Chairman or a member of the Stakeholders Relationship Committee was present at the Annual Ge
to answer the shareholders' queries.
Check whether the company has taken Director & Officers Liability Insurance for managing director, whole-time dire
Chief Executive Officer, Chief Financial Officer or Company Secretary.
Check that every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand
or a net profit of rupees five crore or more during any financial year has constituted a Corporate Social Responsibility
the Board consisting of three or more directors, out of which at least one director is an independent director.
Check that the board's report discloses the details about the policy developed and implemented by the company on co
responsibility initiatives taken during the year.
Check that the Corporate Social Responsibility Policy for the Company was approved by the board of directors and th
such Policy are disclosed in its report and also place it on the company's website.
Check that the composition of the committee is also disclosed in the Board's Report.
Check that the company has disclosed reasons for not spending the amount for CSR in its Board's report., if so.
Check that in case of listed company that it has constituted a Risk Management Committee.
Check that the company has laid down procedures to inform Board members about the risk assessment and minimiza
Check that the Board has framed, implemented and monitored the risk management plan for the company.
Ensure that a statement is made w.r.t. risk management policy in Board's report.
Check that the Code of Conduct for the Board of Directors and the senior management is disclosed on the website of
Check the annual report for the details of training imparted to Independent Directors shall be disclosed in the Annual
Check that every company observes secretarial standards with respect to conduct of Board meetings
Remarks