Code
of Conduct for Directors and Senior Executives and Codes for
Board Procedures of a
Listed Company
One of the universally accepted characteristics of a
professional body or an organisation is the observance of
strict code of conduct by the concerned persons of that body
or organisation. Code
of conduct is essentially a set of simple rules, outlining the
accepted conduct for observance by the concerned persons of a
professional body or organisation and embodies penal
consequences from the non observance on their part.
Need
for a Code of Conduct under corporate governance
Sub-clause (D)(i) of Clause 49 of the listing agreement
pertaining to corporate governance stipulates that the Board
of Directors shall lay down the code of conduct for all the
Board members and Senior Management of the company.
The code of conduct shall be posted on website of the
company. Sub
clause (D)(ii) of the aforesaid clause maintains that all
Board members and Senior management personnel shall affirm
compliance with the code on annual basis.
The annual report of the company shall contain
declaration to this effect signed by CEO.
CEO and CFO shall certify or report to the Board that no
transactions were entered into by the company during the year
which are fraudulent, illegal or violative of the company’s
code of conduct.
For this purpose the term ‘Senior Management’ shall mean
personnel of the company
who are members of the company management team
excluding the Board of directors.
Definitions of
various Terms
Various terms used in the Code of Conduct have been defined as
at Annexure 1 placed here below for the sake of
clarity.
Responsibilities of the
Board of Directors of a Listed Company
Because
of the requirement of code of conduct under clause 49 the
Board of directors of a listed company should establish the
codes for directors and senior management and also codes for
Board procedures as a part of good corporate governance. The
code of conduct should lay emphasis on the ethical standards
of the directors as well as the senior management in the
dealings and relationship with the shareholders, government,
other bodies and public in general.
The code of conduct should help maintain a corporate
culture for promotion of high standards of ethical conduct on
the part of the corporation and its leaders.
An effective code of conduct requires that every Board
members and senior management personnel exhibit the highest
standards professionalism, honesty, integrity along with
impartiality fairness
and equity.
Model
Code of Conduct
There is no such set of conducts as may be termed as model or
standard code of conducts.
The code of conduct varies depending on the nature of
industry as well as various internal and external factors
prevailing upon the company as well as the industry as a
whole.
Keeping
all these aspects into consideration the code of conduct for
the Board of directors and senior management personnel of the
Orissa Minerals Development Co Ltd (OMDC) and also for Board
procedures have been framed so that it promotes highest
standards of ethical conduct on the part of these personnel
and image of the company is upheld before the stake holders.
Monitoring
of the compliance of the code
Compliance
should be monitored, preferably by the audit committee of the
Board and breach of the procedures should be reported to the
Board. The Board
should ensure that each director be given on appointment,
sufficient information to enable him/her to perform his/her
duties. In
particular guidelines for non executive director should cover
the procedures (a) for obtaining information concerning the
company and (b) for requisition of the meeting of the Board.
Code
of Conduct
A.
Code of conduct for Directors and Senior Management Personnel
The directors and senior management personnel of the
company are expected to maintain the highest standards of
ethical conduct. The
Board of directors is responsible for setting the codes and
for their updating and revision whenever required to reflect
legal and regulatory developments.
It is expected that every director and senior
management personnel of the company are capable of reading and
understanding the code and its applications in performance of
their duties.
1)
Disclosure of Interest
The directors shall disclose before the Board their interest,
if any, in any transaction with the company whether directly
or indirectly.
Senior management shall make disclosures to the Board relating
to all material financial and commercial transactions, where
they have personal interest or where they may have a potential
conflict with the interest of the company at large ( such as
dealing in company shares, commercial dealings with bodies,
which have shareholding of management and their relatives
etc).
2)
Divulging Information jeopardizing interest of the
company
They shall not divulge any information to any outsiders which
may be against the interest of the company.
3)
Divulging
Information amounting to Insider Trading
They shall not divulge any such information as may be deemed
as Price Sensitive Information leading to Insider Trading.
4)
Abiding
by all laws etc
They should abide by all laws, rules and regulations
applicable to the company.
5)
Protection
of company’s assets
They shall ensure protection and efficient use of the
company’s assets. Company’s
resources should be used only to conduct company’s business.
6)
Discharging
duties to best judgement
They shall discharge the duties in accordance with the best
judgement and in the best interest of the company and its
stake holders. They are expected to act diligently, openly,
honestly and in good faith.
7)
Maintaining
confidentiality
They must maintain confidentially of all the material and non
public information entrusted to them by the company except
when the company authorises disclosure as required by laws,
regulations or legal proceedings.
8)
Every director shall inform the company about
the committee
positions he occupies in other companies and notify changes as
and when they take place. A director shall not be a member in
more than ten committee or act as a Chairman of more than five
committees across all companies in which he is a director.
9)
Exercising
powers within ambits
They shall exercise their power within the framework of
the Companies Act, SEBI Regulations, other relevant Acts,
Company’s Memorandum and Articles of Associations and other
relevant documents in this regard.
10)
Reporting
to Chairman for illegal/unethical conduct of any employee
They should report to the Chairman of the Board about any
illegal or unethical behavior of any employee, officer or
director.
11)
Public
Disclosure
They shall provide information so that the company’s public
disclosure requirements
be full fair, accurate, timely and understandable.
12) Compliance
with code and violation
All the persons to whom such code is applicable shall
agree to comply with
the same and support a mechanism for the prompt and fair
adjudication of alleged violations of the code.
13) Compliance
Officer
The Company Secretary shall act as a Compliance Officer
to administer the code.
14) Amendment
and Modification
The code may be amended by the Board subject to the provisions
of applicable laws, rules and regulations.
B.
Codes for Board
business
1) Observance
of two Fundamental
Concepts
In the conduct of Board business two fundamental concepts
should be observed:
(i)
each director should receive the same information at
the same time, and
(ii)
each director should be given sufficient time to enable
him/her to perform his/ her duties.
2)
Identification
of Matters requiring prior Approval
The Board shall identify the matters which require prior
approval of the Board and lay down procedures to be followed
when, exceptionally, decision is required before its next
meeting or any other matter
not required by law to be considered at the Board level. If it
is practicable the approval of all the directors should be
obtained by means of circular resolution.
3)
Procedures
balancing the need for urgency
In all cases the procedures should balance the need for
urgency with the overriding principle that each director
should be given as much information as possible and have an
opportunity to requisition an emergency meeting of the Board
to discuss the matter prior to the commitment of the company.
4)
Material
Contracts
All material contracts, especially those not in the ordinary
course of business, shall be referred to the Board for
decision prior to the commitment of the company.
Financial limits should be set where appropriate.
5)
Uncertainty
regarding the materiality of contract
Where there is any uncertainty regarding the materiality or
nature of contract the
same should be brought before the Board.
6)
Content of
the agenda
The Chairman in consultation with the Company Secretary shall
take decision regarding the content of the agenda for
individual meeting of the Board and concerning the
presentation of agenda item.
7)
Proper
administration of the meeting
Company Secretary as Compliance Officer shall be responsible
to the Chairman for proper administration of the meetings of
the company, the Board and any committee thereof.
8)
Preparation
of Minutes
The Company Secretary shall be present at the meeting and
prepare or arrange Minutes of procedures of all such meetings
of the company, the Board and the Committee.
9)
Recording of
decisions taken at the Meeting
Minutes of the meeting should record decisions taken and
provide sufficient background to those decisions.
10)
Identification
of papers presented at the Meeting
All papers presented at the meetings should be clearly
identified in the Minutes and retained for reference.
11)
Procedure
for approval etc.
Procedure for the approval and circulation of Minutes should
be established.
12)
Delegation
of Power
Where Articles of Association allow the Board to delegate its
power to any committee, the
Board shall give its prior approval to:
i)
the membership and quorum of any such committee;
ii) its
terms of reference; and
iii)
extent of any power delegated to it.
13)
Circulation
of the Minutes of the Committee of the Board
The minutes of all meetings of the committees of the Board (or
written summary thereof) shall be circulated to the Board
prior to its next meeting.
Any member of the Board shall be within his/her right to raise
queries or seek clarifications on the same at the next meeting
at which the Minutes of the committee meetings are laid for
confirmation.
14)
Raising or
Placing items outside agenda
Notwithstanding the absence of formal agenda item the Chairman
shall permit any director or company secretary to raise at any
Board meeting any matter concerning company’s compliance
with the code of conduct, with the company’s Memorandum and
Articles of Association and with any other legal and
regulatory requirement.
15)
Routine and minor
business should normally be placed at the initial of the
meeting and important items be placed thereafter to enable the
directors to deliberate at length on items.
The meeting may end up with smaller other business.
16)
The Board ensures that
a system is in place for controlling risks. The Board shall
develop risk management system for translating and integrating
the risk perceptions and risk information in terms of their
economic implications and financial impact.
The Board shall review the system every quarter.
17)
The Board shall periodically review compliance reports
of all laws applicable to the company, prepared by the company
as well as steps taken by the company to rectify instances of
non-compliance.
ANNEXURE - 1
Code
of Conduct pursuant to Clause 49
of the Listing Agreement
Definitions
of Various Terms
With reference to the Code of Conduct for Directors and Senior
Management pertaining to I(D) of clause 49 of the listing
agreement the following terms are defined as below :
‘CEO’ means Chief Executive Officer of the
company i.e. Managing Director or Manager appointed in terms
of Companies Act, 1956.
‘CFO’
means the whole time Finance Director or any other person
heading Financial function of the company.
‘Senior
Management’
shall mean personnel of the company who are members of its
core management team excluding Board of Directors. Normally,
this would comprise all members of management one level below
the executive directors, including all functional heads.
In respect of OMDC the following executives shall be
termed as Senior Management Personnel :
a)
General Manager of Mines – Head of the Mines at
Thakurani and Roida
b)
Deputy General Manager (Mines)
c)
Deputy General Manager (Geology & Environment)
d)
Chief Manager (Finance)
e)
Company Secretary
f)
Head of the Commercial Department
g)
Head of the Personal Department
Compliance Officer
means officers responsible for administering the code. The
Company Secretary of the company shall be the Compliance
Officer for OMDC.
‘Chairman’
shall mean the Chairman of the Board of Directors of the
company.
‘Audit Committee’
shall mean the committee constituted under sub-clause II of
clause 49 of the listing agreement.
‘Non
Executive Director’ shall mean a Director on the Board
who is neither holding any whole-time position nor functioning
as such.
‘Independent Director’
shall mean a Director defined under sub clause I(iii) of
clause 49 of the listing agreement.
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