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Corporate Governance | Results Center | Media Center | FAQs

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Accountability: The liability of a board of directors to shareholders and stakeholders for corporate performance and actions of the corporation.

Affiliated company: Two companies are considered affiliated in case they have the same owner or both are a third company’s subsidiaries 

AGM – Annual General Meeting: A company gathering, usually held at the end of each fiscal year, at which shareholders and management discuss the previous year and the outlook for the future, directors are elected and other shareholder concerns are addressed

Annual report: An audited document issued annually by all publicly listed corporations to their shareholders in accordance with SEBI regulation. Contains information on financial results and overall performance of the previous fiscal year and comments on future outlook and and a report from the directors on their stewardship of the company.

Audit report: Statement of the accounting firm's assessment of the validity and accuracy of a company's financial information and conformity with accepted accounting practices.

Auditor’s report: An auditor’s opinion on the accuracy of the company’s financial statements commonly included in the annual report.

Auditors: Auditors are person/s who carry out an audit. A company's auditors are normally appointed by the shareholders at the AGM. Their usual role is to check whether the accounts comply with the legislation and are in accordance with applicable Accounting Standards and whether they show a true and fair view.

Balance Sheet: The balance sheet is a financial snapshot showing the assets of a business and how they are financed. The excess of the assets over the liabilities is the equity or net assets.

Board of directors: The collective group of individuals elected by the shareholders of a corporation to oversee the management of the corporation.

Book Value: Value of company or of an asset according to accounting records. The book value does not always bear a relation to the fair market of an asset or a company.

Bylaws: A document stating the rules of internal governance for a corporation as adopted by its board of directors

Capital market: An organized system where ownership rights in corporations (shares or stocks) are bought and sold. Usually called a “stock exchange”, the system may have brokers present on a “floor” for hours like or it might electronically match buy and sell orders like National Stock Exchange (NSE).

Chairman of the board: Highest-ranking director in a corporation's board of directors.

Clause 49: The term ‘Clause 49’ refers to clause number 49 of the Listing Agreement between a company and the stock exchanges on which it is listed (the Listing Agreement is identical for all Indian stock exchanges, including the NSE and BSE). Clause 49, when it was first added, was intended to introduce some basic corporate governance practices in Indian companies and brought in a number of key changes in governance and disclosures. Since its inception, there have been various revisions to it.

Corporate actions: Usually a motion made by a shareholder, which, if approved by the majority of voting shareholders at the meeting in which the motion is made, causes the corporation to do a specific thing. This could be a change of corporate policy, or the obligation to give employees a certain type of pension.

Corporate Governance: The system of relations between the shareholders, Board of Directors and management of a company, as defined by the corporate charter, bylaws, formal policy and rule of law. It refers to the accountability of directors and auditors, standards of financial reporting etc. Corporate Governance is about the way that companies are governed and controlled.

Director: A person elected by shareholders to serve on the corporation's board of directors.

Equity: An ownership interest in a company. 
Executive Director: A member of a company's board of directors who is also an employee of the company.

Fair Disclosure: The release of all material, market-influencing information to the public at the same time.

Golden Handshake: A clause in an executive employment contract that provides the executive with a lucrative severance package in the event of their termination. May include a continuation of salary, bonus and/or certain benefits and perquisites.

Historical Cost: An accounting principle requiring all financial statement items to be based on original cost.

Independent director: A person who does not depend financially or through familial or business connections on the Chairman of the Board of the company’s business.

Listed: The Company is traded on a stock exchange.

Merger: The combination of two or more entities through a purchase acquisition or a pooling of interests. A merger occurs when two companies combine to form a single company.

Non-executive director: A director who is not actively involved in running any aspect of the company.

Notice of meeting: To convoke a shareholder or director meeting, formal notice requirements must be met. These requirements are found in corporate laws and the organizing documents of the company. The purpose of the notice is to give shareholders information about what will happen at the meeting, where it will be held and when.

Proxy: A vote, almost always in writing, which is cast by a substitute in place of the shareholder.

Quarterly Report: Unedited document reporting the financial results for the quarter.

Risk Management: The process of analyzing a corporation's exposure to risk and determining how to best handle such exposure.

S.E.B.I - Securities and Exchange Board of India: A legal body set up by the government to supervise the capital market. Its purpose is to make certain that the market functions smoothly, and that all investors are treated equally and fairly.

Voting Shares: Common shares and preferred shares when providing such rights on all agenda items (if dividends were not fully paid) or certain items.