PRESENTATION IOD, PROGRAMME ON : “ MASTER CLASS FOR DIRECTORS ” SESSION ON : “ DUTIES, RESPONSIBILITIES & LIABILITIES OF DIRECTORSHIP ” Wednesday, March 05, 2008, Mumbai

D - DIRECT I - INTERACT R - REVIEW E - ENABLE C - CONTROL T - TRUST O - OVERSEE R - REGULATE

TOP MANAGEMENT PROCESS ROLE OF BOARD ROLE OF BOARD SUB-COMMITTEES ROLE FOR EXTERNAL DIRECTORS ROLE OF MIS – LIFELINE OF COMPANY ENSURE COMMUNICATION – UP AND DOWN COLLABORATIVE APPROACH NRN/HPCL

CORPORATE MANAGERIAL PROCESS OVERALL MANAGEMENT OF COMPANY LAYERS OF AUTHORITIES BOARD AT APEX LEVEL SENIOR MANAGEMENT TEAM (INTERNAL) FUNCTIONAL / SBU HEADS WORKING LEVEL GROUPS BOARD SUB-COMMITTEES NRN / HPCL

BOARD ’ S ROLE - MACRO DEVELOPMENT OF VISION STRATEGY TO ATTAIN VISION INTERNAL GUIDANCE / SUPERVISION COMPLIANCE OF REGULATIONS FOCUS ON GOVERNANCE / CSR STRATEGY FOR SUSTENANCE / GROWTH. NRN / HPCL

ROLES / DUTIES / RESPONSIBILITIES - MANAGERIAL - SUPERVISORY - REGULATORY - FIDUCIARY - GENERAL

DUTIES DIRECTORS - BOTH TRUSTEES & AGENTS FACILITATE GOOD GOVERNANCE FACILITATE GOOD PERFORMANCE & GROWTH FULL DISCLOSURE TO SHAREHOLDERS ENSURE GOOD SYSTEMS / PROCEDURE / CONTROLS ENSURE PERIODIC REPORTING / EXCEPTION REPORTS DILIGENT USE OF COMPANY RESOURCES GOOD HR ENVIRONMENT

LIABILITIES ERRORS (BONAFIDE / MALAFIDE) ULTRA-VIRES ACTS FRAUDULENT ACTS THIRD PARTY LIABILITIES DEFENSE IN LEGAL CASES LIABILITIES POST RETIREMENT - ACTS OF COMPANY BEFORE RETIREMENT - ACTS OF COMPANY AFTER RETIREMENT INSURANCE COVERAGE ….. TO BE CONTD

LIABILITIES ……….CONTD/ RIGHT OF DISSENT IN BOARD DECISIONS FINE & IMPRISONMENT PERSONAL LIABILITIES CIVIL LIABILITIES CRIMINAL LIABILITIES

ESSENCE OF GOOD GOVERNANCE ADHERENCE TO REGULATIONS TRANSPARENT PROCESS FAIR & ETHICAL CONCERN FOR THE SOCIETY EMPHASIS ON MAXIMUM DISCLOSURE

CLAUSE 49 – IMPORTANT AREAS AUDIT COMMITTEE CEO / CFO CERTIFICATION RISK MINIMISATION LEGAL COMPLIANCE CODE OF CONDUCT INDEPENDENT DIRECTORS PERIODIC DISCLOSURES

WHOLE-TIME / PART-TIME WHOLE TIME : ONLY ONE POSITION CAN BE PART-TIME IN OTHER COMPANIES FULL RESPONSIBILITY OF THE POSITION FULL ACCOUNTABILITY POWER TO DELEGATE, BUT ACCOUNTABLE LAW MAKES NO DISTINCTION ON DIRECTORS ’ ACCOUNTABILITY / LIABILITY

WHOLE-TIME / PART-TIME …… CONTD PART- TIME : ACCOUNTABLE TO BOARD DECISIONS NUMBER OF COMPANIES ; 15 LIMIT ON MEMBERSHIPS OF COMMITTEES - 10 LIMIT ON CHAIRMANSHIPS OF COMMITTES - 5

CODE OF CONDUCT TRUSTEE FOR THE COMPANY CONFIDENTIALITY PROTECTING INTEREST OF THE COMPANY NO UNDUE GAIN / BENEFITS DISCLOSURE OF OTHER DIRECTORSHIP INTERESTED CONTRACTS

BOARD SUB-COMMITTEES AUDIT COMMITTEE SHAREHOLDERS GRIEVANCE REDRESSAL INVESTMENT COMMITTEE HR COMMITTEE PROJECTS REVIEW COMMITTEE OTHER MAJOR AREAS NRN / HPCL

ROLE OF EXTERNAL DIRECTORS TOTAL INDEPENDENCE PROVIDE EXTERNAL VIEWPOINTS SEEK CRITICAL INFORMATION MONITORING / REVIEW ROLE FACILITATE CORPORATE GOVERNANCE NRN / HPCL

AREAS FOR CAUTION LIMIT ON THE NO.OF DIRECTORSHIPS SEEK INFORMATION BEFORE ACCEPTING DIRECTORSHIP REVIEW PAST FIVE YEARS ANNUAL REPORT ENSURE LEGAL COMPLIANCE REPORTING ACCURACY OF DATA (E.X. PROSPECTUS) INTERACT WITH COMPANY SECRETARY ENSURE OWN LEGAL COMPLIANCES REGULAR SELF UPDATION SEEK INFORMATION / CLARIFICATIONS PRESERVE IMPORTANT PAPERS

GENERAL GOOD GOVERNANCE GOOD CSR TRUST OF STAKEHOLDERS TRUST OF PUBLIC COMPANIES KNOWN FOR HIGH GOVERNANCE - TATAS - INFOSYS - GE

GOVERNANCE Governance is streamlined Managerial Process. Compliance of External Regulations Adherence to Internal Procedures Proper Documentation Ensure Accuracy of Data Ensure Disclosure / Reportings Retention / Retrieval of Documents Ensure smooth Succession Planning Facilitate overall Corporate Governance

RECENT ISSUES OF DEBATE PART-TIME OR WHOLETIME - CEO COMPOSITION OF BOARD WHOLE-TIME V/S. PART-TIME REMUNERATION OF INDEPENDENT DIRECTORS CG & CSR – CAN IT CO-EXIST TOO MUCH OF REGULATIONS ? NRN / HPCL

THANK YOU