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Corporate Governance

 

Definition and Purpose The Governance Structure Roles Board Committees

Roles

The core roles of the various entities at the three levels of Corporate Governance will be as follows:

Board of Directors (Board) :

The primary role of the Board of Directors is that of trusteeship to protect and enhance shareholder value through strategic supervision of ITC, its wholly owned subsidiaries and their wholly owned subsidiaries. As trustees they will ensure that the Company has clear goals relating to shareholder value and its growth. They should set strategic goals and seek accountability for their fulfillment. They will provide direction, and exercise appropriate control to ensure that the Company is managed in a manner that fulfills stakeholder aspirations and societal expectations. The Board must periodically review its own functioning to ensure that it is fulfilling its role. The Board will also evaluate the performance of the CEO, the other Directors and Board Committees.

The ITC Board will be a balanced Board, consisting of Executive and Non-Executive Directors including Independent Directors. The Board will have a balance of skills, experience and diversity of perspectives appropriate to the Company. The Non-Executive Directors shall be drawn from amongst eminent professionals, with experience in business / finance / law / public administration & enterprises. Directors shall be appointed / re-appointed for a period of three to five years or a shorter duration, in accordance with the retirement guidelines as may be determined by the Board from time to time or by any applicable statutes, rules, regulations or guidelines, and in the case of Executive Directors up to the date of their retirement, whichever is earlier. The Board shall determine from time to time the retirement age for both Executive and Non-Executive Directors. The Board shall specify the maximum number of company Directorships which can be held by members of the ITC Board.

Non-Executive Directors, including Independent Directors, are expected to play a critical role in imparting balance to the Board processes by bringing an independent judgement to bear on issues of strategy, performance, resources, standards of Company conduct etc.

The Board shall meet at least five times a year. The tentative annual calendar of meetings shall be agreed upon at the beginning of each year. As laid down in the Articles of Association of the Company, the quorum for meetings shall be one third of members and decisions shall be taken by simple majority, unless statutorily required otherwise. Meetings shall be governed by a structured agenda. All major issues included in the agenda shall be backed by comprehensive background information to enable the Board to take informed decisions. Agenda papers, as far as practicable, shall be circulated at least seven days prior to the meeting. Normally items for the Board Agenda, except those emanating from Board Committees, shall have been examined by the CMC. Draft Minutes of Board Meeting shall be circulated within 15 days of the meeting and noted / confirmed at the next meeting. Board decisions shall record the related logic as far as practicable.

The Board shall have the following Committees whose terms of reference shall be determined by the Board from time to time:

Audit Committee : To provide reassurance to the Board on the adequacy of internal control systems and financial disclosures. The Company Secretary shall be the Secretary to the Audit Committee. The Head of Internal Audit shall be Co-ordinator of the Committee and shall be Permanent Invitee to the meetings of the Committee.

Nomination & Compensation Committee: To identify persons qualified to become Directors and to formulate criteria for evaluation of performance of the CEO, other Directors and the Board. The Committee's role also includes recommending to the Board the appointment, remuneration and removal of Directors, CMC Members and managers one level below Director. The Committee also has the responsibility for administering the Employee Stock Option Schemes of the Company.

Securityholders Relationship Committee: To oversee redressal of shareholder and investor grievances and, inter alia, approve transmission of shares, sub-division / consolidation / renewal / issue of duplicate share certificates etc. and allotment of shares upon exercise of Options under the Company's Employee Stock Option Schemes.

CSR and Sustainability Committee: To review, monitor and provide strategic direction to the Company's CSR and sustainability practices towards fulfilling its triple bottom line objectives. The Committee shall guide the Company in integrating its social and environmental objectives with its business strategies and assist in crafting unique models to support creation of sustainable livelihoods. The Committee shall also formulate & monitor the CSR Policy and recommend to the Board the annual CSR Plan of the Company.

Independent Directors Committee: The role of the Committee would be such as may be prescribed under law.

Terms of Reference of the Board Committees shall include :

  • Objectives, Roles & Responsibilities
  • Authority / Powers
  • Membership & Quorum
  • Chairmanship
  • Tenure
  • Frequency of Meetings

The composition of the Board Committees will be as follows or as may be prescribed by law from time to time :-

Committee Members Chairman
Audit Committee Three or more Directors of the Company, as may be decided by the Board with at least two-third of the members being Independent Directors. The Executive Director representing the Finance function, the Chief Financial Officer, the Head of Internal Audit and the representative of the Auditors shall be Invitees to the meetings of the Committee. The Company Secretary shall act as the Secretary. One of the Independent Directors, to be appointed by the Board.
Nomination & Compensation Committee Three or more Non-Executive Directors of the Company, as may be decided by the Board with at least one-half of the members being Independent Directors. The Chairman of the Company shall be a Member. The Company Secretary shall act as the Secretary. One of the Independent Directors, to be appointed by the Board.
Securityholders Relationship Committee Three or more Directors of the Company, as may be decided by the Board with at least one member being a Non-Executive Director. The Company Secretary shall act as the Secretary. One of the Non-Executive Directors, to be appointed by the Board.
CSR and Sustainability Committee Three or more Directors of the Company, as may be decided by the Board with at least one member being an Independent Director. The Company Secretary shall act as the Secretary. Chairman of the Board.
Independent Directors Committee All the Independent Directors of the Company. One of the Independent Directors.

 Normally meetings of the Board Committees shall be convened by their respective Chairmen. However, any member of the Committee may, with the consent of the concerned Chairman, convene a meeting of the Committee.

Signed minutes of Board Committee meetings shall be tabled for the Board's information as soon as possible. However, issues requiring Board's attention / approval should be tabled in the form of note(s) to the Board from the Committee Chairman.

Risk Management Committee :

The Risk Management Committee constituted by the Board comprises the Executive Directors and senior managers. The role of the Committee includes approval of the strategic risk management framework of the Company, review of the risk mitigation strategies and results of risk identification, prioritisation and mitigation plans for all businesses / functions. The Chief Risk Officer of the Company shall act as the Secretary to the Committee.

Corporate Management Committee (CMC) :

The primary role of the CMC is strategic management of the Company's businesses within Board approved direction / framework and realization of Company goals. The CMC will assess the performance of the businesses and allocate resources, and will operate under the superintendence and control of the Board. The composition of the CMC will be determined by the Board (based on the recommendation of the Nomination & Compensation Committee), and will consist of the Chief Executive Officer , all the other Executive Directors and some key senior members of management. Membership of the CMC shall be reviewed by the Nomination & Compensation Committee as and when necessary. Meetings of the CMC shall be convened and chaired by the CEO. The Company Secretary or such other person as may be decided by the Nomination & Compensation Committee / Board shall be the Secretary to the CMC.

Chairman :

The primary role of the Chairman of ITC is to provide leadership to the Board, support management of critical external relationships including shareholder issues and mentor the executive management of the Company led by the CEO. As the Chairman of the Board, he will preside over its meetings and will lead and assist the Board in setting and realising the Company’s strategic Vision and related short and long term goals.

He shall be responsible for the working of the Board, for its balance of membership (subject to Board and Shareholder approvals) and for ensuring that all directors are enabled and encouraged to play a full part in the activities of the Board. Based on information and feedback from the CEO, the Chairman shall ensure that all relevant issues are on the Board agenda and the Board is kept informed on all matters of importance. He shall preside over the General Meetings of the shareholders.

In order to ensure a smooth transition to the new Corporate Governance structure, namely separation of the roles of the CEO and the Chairman of the Board, the Chairman in his non-executive capacity, shall assume the role of the Chief Mentor to the CEO and the CMC. The primary purpose of such mentorship will be to provide guidance and advice to the CEO and the CMC to enhance their effectiveness in the discharge of their roles and responsibilities. The Chairman will determine from time to time, as appropriate, the systems, processes and review interventions necessary for effective mentoring.

Chief Executive Officer :

The Chief Executive Officer will carry total responsibility for the strategic management of the Company and accordingly will head the Corporate Management Committee (CMC). His primary role is to provide leadership to the CMC for realizing Company goals in accordance with the charter approved by the Board. He will be responsible for the working of the CMC, ensuring that all relevant issues are on the agenda, that all CMC members are enabled and encouraged to play a full part in its activities.

The CEO will be responsible to ensure that the CMC functions in accordance with the Company’s Governance policies, and in compliance with Board directives with guidance from the Chairman as mentor.

In respect of the Businesses which directly report to the CEO, he will have the responsibility of Line Director.

The CEO will be responsible to keep the Chairman advised on all important and critical matters, in particular those that need to be informed to the Board to enable it to discharge its role and responsibilities.

Executive Director :

  • As a member of the CMC, contribute to the strategic management of the Company's businesses within Board approved direction / framework.
  • As Director accountable to the Board for a business or shared services (Line Director), assume overall responsibility for its strategic management, including governance processes and top management effectiveness.

    In the context of the multi-business character of the Company, an Executive Director is in the nature of a Managing Director for those businesses and functions reporting to him.
  • As Director accountable to the Board for a wholly owned subsidiary, or its wholly owned subsidiary (Line Director), at all times exercise independent judgement and application of mind in the interest of the company and its shareholder.
  • As Director accountable to the Board for a corporate function (Line Director), assume overall strategic responsibility for its performance.

CMC Member :

  • As a member of the CMC, contribute to the strategic management of the Company's businesses within Board approved direction / framework.
  • As CMC Member accountable for a business or shared services (Line CMC Member), assume responsibility for its strategic management, including governance processes and top management effectiveness.
  • As CMC Member accountable for a wholly owned subsidiary, or its wholly owned subsidiary (Line CMC Member), at all times exercise independent judgement and application of mind in the interest of the company and its shareholder.
  • As CMC Member accountable for a corporate function (Line CMC Member), assume overall strategic responsibility for its performance.

Divisional Management Committee (DMC) :

Executive management of the divisional business/ shared services to realise tactical and strategic objectives in accordance with CMC / Board approved plan. Composition of the DMC shall be determined by the Line Director with the approval of the CMC. The Divisional Chief Executive shall convene and chair the DMC meetings.

Executive Committee for Business Vertical (EC) :

The CMC, in order to drive sharper focus, greater agility and responsiveness, may form Business Verticals within the Division / Business / Shared Services from time to time. Each of these Verticals will have its own EC led by the COO - Business Vertical with responsibility for delivering comprehensive business results under the overall direction and supervision of the DCE supported by the DMC. Each such Vertical will be represented on the DMC.

Composition of EC for Business Vertical shall be determined by the Line Director with the approval of the CMC.

Divisional / SBU Chief Executive :

The Divisional / SBU CEO will have executive responsibility of the business and shall provide leadership to the Divisional Management Committee in its task of executive management of the divisional business and of the Verticals within the Division.

Chief Operating Officer - Business Vertical (COO - BV) :

COO-BV shall be responsible for providing leadership to the Vertical and realizing the tactical and strategic objectives of their business area.