The UK Corporate Governance Code requires that the division of responsibilities between the Chairman and Chief Executive should be clearly established in writing and agreed by the Board.

We agree with this approach but note two reservations. First, the nature of the relationship between Chairman and Chief Executive is almost invariably more important than the definition of their respective roles. The relationship needs to be characterised by openness and integrity. Secondly, undue formalisation of roles cannot take unforeseen circumstances into account and therefore a general framework of principles seems preferable to excessive prescription. Accordingly, the following description, whilst setting out a clear division of responsibilities, is not intended to provide a definitive list of their individual responsibilities.

Chairman

The Chairman is responsible for leadership of the Board. In particular, he will:

Ensure effective operation of the Board and its committees in conformity with the highest standards of corporate governance.
Ensure effective communication with shareholders, host governments and other relevant constituencies and that the views of these groups are understood by the Board.
Set the agenda, style and tone of Board discussions to promote constructive debate and effective decision-making.
Chair the Nominations Committee and build an effective and complementary Board, initiating change and planning succession on Board and Group Executive appointments.
Ensure that all Board committees are properly established, composed and operated.
Ensure comprehensive induction programmes for new directors and updates for all directors as and when necessary.
Support the Chief Executive in the development of strategy and, more broadly, to support and advise the Chief Executive.
Maintain access to senior management as is necessary and useful, but not intrude on the Chief Executive's responsibilities.
Promote effective relationships and communications between non-executive directors and members of the Group Executive Committee.
Ensure that the performance of the Board, its main committees and individual directors is formally evaluated on an annual basis.
Establish a harmonious and open relationship with the Chief Executive.

Chief Executive

The Chief Executive is responsible for leadership of the business and managing it within the authorities delegated by the Board. In particular, he will:

Develop strategy proposals for recommendation to the Board and ensure that agreed strategies are reflected in the business.
Develop annual plans, consistent with agreed strategies, for presentation to the Board for support.
Plan human resourcing to ensure that the Company has the capabilities and resources required to achieve its plans.
Develop an organisational structure and establish processes and systems to ensure the efficient organisation of resources.
Be responsible to the Board for the performance of the business consistent with agreed plans, strategies and policies.
Lead the executive team, including the development of performance contracts and appraisals.
Ensure that financial results, business strategies and, where appropriate, targets and milestones are communicated to the investment community.
Develop and promote effective communication with shareholders and other relevant constituencies.
Ensure that business performance is consistent with the Business Principles.
Ensure that robust management succession and management development plans are in place and presented to the Board from time to time.
Develop processes and structures to ensure that capital investment proposals are reviewed thoroughly, that associated risks are identified and appropriate steps taken to manage the risks.
Develop and maintain an effective framework of internal controls over risk in relation to all business activities including the Group's trading activities.
Ensure that the flow of information to the Board is accurate, timely and clear.
Establish a close relationship of trust with the Chairman, reporting key developments to him in a timely manner and seeking advice and support as appropriate.

The Chairman and Chief Executive will meet regularly to review issues, opportunities and problems.

The the Senior Independent Director

Senior independent director

Role

Meet with the other members of the Board without the Chairman present on at least an annual basis in order to evaluate and appraise the performance of the Chairman;

Chair the Nominations Committee when considering succession to the role of the Chairman of the Board;

Act as a point of contact for shareholders and other stakeholders with concerns which have failed to be resolved or would not be appropriate through the normal channels of the Chairman, Chief Executive and/or Chief Financial Officer; and

Act as an alternative point of contact for Executive Directors, if required, in addition to the normal channels of the Chairman and/or the Chief Executive;

Meet with the other members of the Board as and when deemed appropriate.

Commitment

Duties of a director

Directors hold a position of trust on behalf of shareholders and direct the company's operations on their behalf. They act through the Board, which usually controls company business.

The extent of the directors' authority depends on the company's Articles of Association. Before you become a director, take legal advice on the extent of your obligations.

As a director, you have several duties:

To act within your powers and make sure the company follows its constitution as set out in the Memorandum and Articles of Association.

To act in good faith to promote the success of the company for the benefit of its members. You must also have take into consideration employees, suppliers, customers, the environment and the community.

To carry out your duties with reasonable care and skill. Higher standards may be expected from executive directors who are responsible for an area in which they have a specialist or professional qualification.

To exercise independent judgement.

To make sure that there is no conflict of interest and duty. You must not take bribes, and must disclose any personal interests to the company. You must not divert business opportunities to yourself that ought to be available to the whole company.

To make a declaration of interest where appropriate. You may not be allowed to vote on matters if there is a conflict of interests.

Not to benefit from a third party by reason of your being a director, or by doing or not doing something.

Not to act with intent to defraud creditors or for any other fraudulent purpose.

Not to engage in wrongful trading, that is, allowing the company to carry on trading when you know (or ought to know) that it is insolvent. This can lead to personal liability.

To carry out the statutory obligations imposed by the Companies Act 2006 and other legislation.

Directors are personally liable for certain actions taken while fulfilling their duties. Several laws give rights of action against directors in their personal capacity, including:

The Insolvency Act 1986 which leads to personal liability where directors allow the company to trade wrongfully or fraudulently.

The Health and Safety at Work Act 1974.

Laws relating to the control and disposal of hazardous waste.

Non-executive directors

Some directors take a less active role in the management of a company and are known as non-executive directors. However, there is no distinction in law between directors, and all have the same duties. So if you are a non-executive director, it's vital that you know what your fellow directors are doing and what the real state of the business is.

Position of trust

Directors must be extremely careful if they want to take advantage of an opportunity for private profit in an area of activity similar to that of the company - even if the company has rejected the particular proposition. For example, you should always take advice before buying or selling any assets from or to the company. Shareholders' approval is needed before a director, or someone connected with the director, may acquire a substantial company asset, or vice versa.

If a director profits personally from his or her position, even if the company itself hasn't suffered because of their action, a court can order him or her to pass on any profits made to the company.

Legal duties of directors

In a company, you may have several roles - as well as acting as a director, you may also own shares, lend the company money and guarantee loans. When there is a conflict of interests between your various roles, the courts will usually support you if you can show you have acted honestly and reasonably.

You must also provide Companies House with statutory information concerning shareholders and directors and, of course, for filing your accounts. If you don't do this, you could be fined.

Before incorporation

Be very careful when negotiating contracts with outside parties on behalf of a company that is yet to be formed, as you may be personally liable for anything you negotiate. Indeed, unless the other party agrees to the contrary, the deal will actually be seen as one entered into by the would-be director acting on their own behalf.

Company stationery

Make sure that the company's full name is displayed at the registered office and on cheques. All company letterheads must show the registered office and business address, if this is different, along with the company number. You must put all or none of the directors' names on letterheads.

Company accounts

You have a statutory duty to prepare accounts, which are usually presented at the annual general meeting of shareholders. You should be able to interpret these because you are responsible for either producing them, or for providing accurate information to an auditor so that they can be prepared. You also have to sign to confirm that they are accurate. Copies of these accounts must be submitted to the Registrar of Companies within ten months of your year-end or you will be fined.

Accounts have to be independently audited, although small and medium-sized companies may be able to file abbreviated accounts at Companies House, and very small or dormant companies may be exempt from audit altogether. Your accountant will be able to give you details about the type of accounts which you need to prepare. You must keep all paperwork safe. Legally, you must keep:

1)Petty cash records, bank paying-in counterfoils, goods in and out records, and all company records, including personnel records, for six years.

2)Annual earnings summaries for 12 years.

3)Registers of directors and secretaries, applications for share documents, pension fund investment details, corporate balance sheets and minutes of general meetings permanently.

The company may not pay for goods and services which you receive personally.

Other disclosure requirements

The Memorandum of Association, filed at Companies House, should contain the company's name, registered office and objectives. The Articles of Association outline the rules about how the company will be managed. These can be the standard ones set out in the Companies Act 1985, or the board can set out its own.

Professional advisers often recommend you adapt the standard Articles so that they suit the requirements of your company in relation to issues such as the circumstances in which (and the parties to whom) shares can be sold.

Directors must inform Companies House of changes in the company's registered address, directors and secretary, along with the annual returns and certain specified resolutions.

Issuing shares

When you issue shares, you must comply with the Companies Act 1985 and Financial Services and Markets Act 2000 and the company's Articles of Association.

Holding meetings

Unless a company opts out of the obligation to hold annual general meetings for the shareholders, it's necessary to hold those meetings every year. You are not legally required to hold board meetings for directors, although it is good practice to do so. Make sure that all directors are given reasonable notice to attend board meetings.

You should always appoint someone to take minutes. These need to be published at the next board meeting and approved.

Directors often attend meetings in two capacities: as a manager and as a board member. The emphasis of the meetings must be on directing rather than managing.

If you disagree with a point raised at the meeting, be sure that it is recorded in the minutes, even if your motion is not carried.

A director's liabilities

Although directors are responsible for making sure the company complies with the law, you could become personally liable if there is fraud, or in some cases, negligence.

Directors can be found individually liable if they act negligently or in breach of trust. You can get insurance which will protect you against the financial consequences of such a finding, but make sure you double-check any exclusions on the policy.

A company's directors are often asked to give personal guarantees for loans, overdrafts and other financial liabilities. Think through the implications of this carefully - if your guarantee is secured by a mortgage on your house, for example, you could lose your home if things go wrong. Always seek professional advice first.

Liability for the company's debts

Companies have limited liability. This protects directors and shareholders, except when they may have undertaken to contribute capital to the company, or can be called upon to do so - for example, with partly paid shares.

If the company gets into financial difficulties, seek professional advice immediately. While directors normally have no personal liability for the company's debts, there are situations where it may be possible for creditors to claim from them personally.

Directors and borrowing

There are strict statutory limits on how much directors can borrow from the company, though loans by directors to their companies are legal and quite common. You should speak to your accountant about the tax implications of borrowing from the company.

Handling capital issues

Directors can only distribute the company's profits after tax by way of taxable dividends according to the rules laid down in the Articles of Association.

If you believe that the company is at risk of becoming insolvent, don't put creditors or guarantors at a disadvantage in recovering their debts from your company by increasing the company's liabilities or transferring or selling the company's assets.

Also, be careful when selling company assets - you shouldn't sell them for less than they are worth and, in certain circumstances, you will need to seek shareholders' agreement first.

Wrongful trading

If a company finds itself in financial trouble and carries on trading to the detriment of its creditors (a practice known as wrongful trading), any director who should have concluded the "point of no return" had been reached, can be held personally liable for the debts if the company then goes into liquidation. Directors must therefore be aware of the company's financial status and ensure that someone competent monitors its solvency.

However, a director can be cleared of this liability if a court is satisfied that when the director realised that the company was not able to recover, he or she took reasonable steps to minimise potential losses to creditors.

Other factors that may help convince a court that you acted properly include making sure that:

1)The board was properly constituted.

2)Board meetings took place with detailed agendas of what was to be discussed.

3)Board meetings were properly minuted.

4)Proper management information was provided and records kept.

If a director is successfully sued for damages, he or she may claim a contribution from anyone else who is also found to be responsible. However, a court can lift this liability wholly or partially if it is satisfied that you acted honestly and reasonably and, on balance, ought fairly to be excused.

Resigning as a director

As a company reaches the "point of no return", directors may feel tempted to resign. However, this does not necessarily free them from their obligations and liabilities:

1)Directors must be seen to have taken positive steps to do everything they could to ensure that the magnitude of a company's problems - or their perception of them - is brought to the attention of the full board of directors.

2)Directors should also try to make sure that the company takes all the steps necessary, including seeking professional advice, to try to recover.

3)Directors are not automatically disqualified from being directors of other companies because one company they worked for went into liquidation. Only a court can order disqualification.

Triple Bottom Line

Sometimes referred to as "TBL", or "3BL. Triple bottom line simply stands for

People

Planet

Profit

Sounds warm and fuzzy doesn't it! But it's actually a serious and increasingly recognized concept. Triple Bottom Line reporting is becoming an accepted way for businesses to demonstrate they have strategies for sustainable growth.

The triple bottom line is a form of reporting that takes into account the impact your business has in terms of social and environmental values along with financial returns.

Whereas traditional models were all about profit, profit and more profit; triple bottom line accounting recognizes that without happy, healthy people to staff a business and the natural environment able to sustain those people and supply resources for trade; business is, well, simply unsustainable in the long run.

Let's break down the three terms and how they apply:

People

This is also known as Human Capital. It really just means treating your employees right, but furthermore also the community where your business operates. In this part of the Triple Bottom Line model, business not only ensures a fair day's work for a fair day's pay; but also reinvesting back some of its gains into the surrounding community through sponsorships, donation or projects that go towards the common good. This reinvestment can usually be written off come tax time as part of business operating expenses.

Planet

This is Natural Capital. A business will strive to minimize its ecological impact in all areas - from sourcing raw materials, to production processes, to shipping and administration. It's a "cradle to grave" approach and in some cases "cradle to cradle" i.e. taking some responsibility for goods after they've been sold - for example, offering a recycling or take-back program. A 3BL business will also refrain from the production of toxic items.

Profit

This is more about making a honest profit than raking a profit at any cost - it must be made in harmony with the other two principles of People and Planet.

While many major corporations used to sneer at the idea of a Triple Bottom Line reporting system; some have taken the bull by the horns; with a positive flow on effect to their suppliers. Because supply chains are also accountable to the overall impact of a company, they also come under scrutiny in the triple bottom line audits. A good example of this is some big box stores "greening" up their act and in doing so, demanding that their suppliers use less packaging, offering concentrated products or banning certain ingredients from products.

The importance of Triple Bottom Line

Here's a somewhat unsettling fact - according to CorpWatch, of the 100 largest economies in the world, 51 are businesses; the other 49 are countries. This is why Triple Bottom Line concepts are so important - it's not just about commerce, it's about civilization.

Triple Bottom Line is not an award, accreditation or a certification you can achieve - it's an ongoing process that just helps a company keep on track towards running a greener business and demonstrates to the community at large they are working not just towards riches, but the greater common good - and that's what consumers are increasingly wanting to see these days.

Green business is simply good business and hopefully before too long it will be the only way to engage in commerce.

Utilitarianism

We don't always have to focus on actions. We can also focus on consequences. If we do this, we wind up with consequentialism. One type of consequentialism is utilitarianism, founded by Jeremy Bentham.

The name of utilitarianism is derived from the Latin 'utilis', meaning 'useful'. In utilitarianism,

the consequences of actions are measured against one value. This 'useful' value can be something like

happiness, welfare or pleasure. It should be maximized.

Utilitarianism is based on the utility principle: we simply need to give the greatest happiness to the

greatest number of people. (Do note that we have silently made the assumption that 'pleasure' is the

only goal in life, and that everything else is just a means to get pleasure. This idea/assumption is called

hedonism.) An action is morally right if it results in pleasure, whereas it is wrong if it gives rise to pain.

The freedom principle is also based on this. This principle states that you can do whatever you want,

as long as you don't cause anyone any pain/harm.

There are several downsides to utilitarianism. Of course it is very hard to determine how much pleasure

an action will actually give. Also, to find the total amount of pleasure, we need to consider all individuals

that are involved and add up their pleasures. But how do we quantify pleasure? And has the pleasure

of one person the same value as the pleasure of another? Also, how do we decide whether one action

gives more pleasure than another? Answering these questions is difficult. Even the clever John Stuart

Mill did not have an answer, although he did have an opinion. He stated that certain pleasures (like

intellectual fulfillment) are by nature more valuable than other pleasures (like physical desires).

Another downside is that utilitarianism doesn't always divide happiness in a fair way. For example, a

very talented entertainer can make a lot of people happy. But does this mean that he needs to spend

every waking moment entertaining people, until he burns out? However, most utilitarians argue that this

isn't a downside of the theory. In fact, they state that after a while, a small moment of spare time will

give the entertainer more happiness than all the people he could have entertained in that time. Thus,

utilitarianism automatically compensates for this 'flaw'.

In utilitarianism, an engineer could also be asked to bend or break a fundamental rule, because this will

result in the greatest happiness for the greatest number of people. For example, the engineer has the

opportunity to save 10 million euros on a design. But he knows that this will later cause an accident

killing 5 people. He argues that 10 million euros can cause more happiness than 5 lifes. To compensate

for this, rule utilitarianism has been created. This kind of utilitarianism recognizes and uses moral

rules. It is thus also similar to duty ethics.

2.4 Virtue ethics and care ethics

Virtue ethics focuses on the nature of the acting person. This actor should base his actions on the

right virtues. So, the central theme in virtue ethics is shaping people into morally good and responsible

creatures. Virtue ethics is rather similar to duty ethics. But, whereas duty ethics is based on certain

rules/norms, virtue ethics is based on certain virtues.

Virtue ethics is strongly influenced by Aristotle. He stated that every moral virtue is positioned somewhere

between two extremes. In fact, the correct moral virtue equals the optimal balance between these

two extremes. For example, to be courageous, you need to find an optimal balance between the two

extremes of cowardice and recklessness. Sadly, there are downsides to this idea. The optimal balance

often depends on the situation which a person is in. Also, moral virtues are subjective: you cannot

generally say that the courageousness of one person is better than the courageousness of the other.

Care ethics is a rather new ethical theory. It emphasizes that the development of morals is not caused

by learning moral principles. Instead, people should learn norms and values in specific contexts. Other

people are of fundamental importance here. By contacting other people, and by placing yourself in their

shoes, you learn what is good or bad at a particular time. The solution of moral problems must always

be focused on maintaining the relationships between people. So, the connectedness of people is the key.

The concept of Fourth-Party Logistics (4PL) began to emerge around 1996 with the term being registered as a trademark, however, not having coined the phrase, Concargo conceptualised and envisioned this initiative as early as 1988.

The definition of Fourth-Party Logistics (4PL) is an integrator that assembles the resources, capabilities and technology of its own organisation and other organisations to design, build and run comprehensive supply chain solutions.

In essence, Fourth-Party Logistics (4PL) means that one company is able to outsource the entire management of its supply chain to another company. This would include all the assets, planning and management of the process.

The 4PL management service provider would gather together all the constituent parts required such as systems, transport providers, order management, and inventory management with a view to providing the client with a fully integrated supply chain. In return the client will pay an appropriate fee and concentrate on its core business.

Fourth-Party Logistics (4 PL) presents a solution that incorporates the advantages of both outsourcing and insourcing to provide maximum overall benefit.

Fourth-Party Logistics differs from traditional 3PL arrangements in four main aspects:

All aspects of the clients' supply chain are managed by the 4PL organisation;

It acts as a single interface between the client and multiple logistics service providers;

It is also possible for a major third party logistics provider to form a 4PL organization within its existing structure; and

The 4pl organization is ofen separate entityestablish as a joint venture or long term contract between primary client and one more partner

Trade union rights defined

ILO Convention No. 87

ILO Convention No. 98

The two conventions cover the basic principles of trade union rights -

The right to organise (87) - the right of workers to form and join independent trade unions of their choice - is the most fundamental of all trade union rights. Without this basic right there can be no other trade union rights.

The right to strike is an essential means available to trade unions for the promotion and protection of their members' interests.

Collective bargaining (98) to determine the terms of employment of union members is the central function of trade unions. It is the main reason why working people join trade unions. The right not to be discriminated against at work for trade union activities is an essential aspect of the right to organise.

Convention 87

Part I. Freedom of Association

Article 1

Each Member of the International Labour Organization for which this Convention is in force undertakes to give effect to the following provisions.

Article 2

Workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organization concerned, to join organizations of their own choosing without previous authorization.

Article 3

1. Workers' and employers' organizations shall have the right to draw up their constitutions and rules, to elect their representatives in full freedom, to organize their administration and activities and to formulate their programmes.
2. The public authorities shall refrain from any interference which would restrict this right or impede the lawful exercise thereof.

Article 4

Workers' and employers' organizations shall not be liable to be dissolved or suspended by administrative authority.

Article 5

Workers' and employers' organizations shall have the right to establish and join federations and confederations and any such organization, federation or confederation shall have the right to affiliate with international organizations of workers and employers.

Part II. Protection of the Right to Organize

Article 11

Each Member of the International Labour Organization for which this Convention is in force undertakes to take all necessary and appropriate measures to ensure that workers and employers may exercise freely the right to organize.

Convention 98

1. Workers shall enjoy adequate protection against acts of anti-union discrimination in respect of their employment.

2. Such protection shall apply more particularly in respect of acts calculated to--

a) make the employment of a worker subject to the condition that he shall not join a union or shall relinquish trade union membership;

b)cause the dismissal of or otherwise prejudice a worker by reason of union membership or because of participation in union activities outside working hours or, with the consent of the employer, within working hours.

Article 2

1. Workers' and employers' organizations shall enjoy adequate protection against any acts of interference by each other or each other's agents or members in their establishment, functioning or administration.

2. In particular, acts which are designed to promote the establishment of workers' organizations under the domination of employers or employers' organizations, or to support workers' organizations by financial or other means, with the object of placing such organizations under the control of employers or employers' organizations, shall be deemed to constitute acts of interference within the meaning of this Article.

Article 3

Machinery appropriate to national conditions shall be established where necessary, for the purpose of ensuring respect for the right to organize as defined in the preceding Articles.

Article 4

Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers or employers' organizations and workers' organizations, with a view to the regulation of terms and conditions of employment by means of collective agreements.

(i) Responsibilities of the Board of Directors

(a) A strong corporate board, should fulfill the following four major roles viz. overseeing the risk profile of the bank, monitoring the integrity of its, business and control mechanisms, ensuring the expert management and maximising the interests of its stakeholders.

(b) The Board of Directors should ensure that responsibilities of directors are well defined and every director should be familiarised on the functioning of the bank before his induction, covering the following essential areas:

Â· delegation of powers to various authorities by the Board,

Â· strategic plan of the institution

Â· organisational structure

Â· financial and other controls and systems

Â· economic features of the market and competitive environment.

(ii) Role and responsibility of independent and non-executive directors

(a) The independent / non-executive directors have a prominent role in inducting and sustaining a pro-active governance framework in banks.

(b) In order to familiarise the independent /non-executive directors with the environment of the bank, banks may circulate among the new directors a brief note on the profile of the bank, the sub committees of the Board, their role, details on delegation of powers, the profiles of the top executives etc.

(c) It would be desirable for the banks to take an undertaking from each independent and non-executive director to the effect that he/she, has gone through the guidelines defining the role and responsibilities and enter into covenant to discharge his/her responsibilities to the best of their abilities, individually and collectively. Corporate Governance for the Financial Sector

No one will deny that, the one sector which deserves close attention in terms of regulation is the financial institutions in the country. Residents of Hyderabad have fresh memories of GTB episode, the moratorium and the subsequent merger with OBC.

Broadly, the financial sector can be divided into following:

Ã˜ Term-Lending Institutions, governed by the Companies Act or Special Acts of Parliament.

Ã˜ Banks [public sector, private sector (old and new generation banks, Cooperative Banks)] governed by Special Acts or BR Act.

Ã˜ Finance companies also known as non-banking financial companies governed by Companies Act and guidelines issued by RBI and FCS.

The Basel Committee in the year 1999, had brought out certain important principles on corporate governance for banking organizations which, more or less have been adopted in India.

Basel committee underscores the need for banks to set strategies for their operations. The committee also insists banks to establish accountability for executing these strategies. Unless there is transparency of information related to decisions and actions, it would be difficult for stakeholders to make managements accountable. The underlying theme is accountability at all levels including the Boards.

From the perspective of banking industry, corporate governance also includes in its ambit the manner in which their boards of directors govern the business and affairs of individual institutions and their functional relationship with senior management. This is determined by how banks:

set corporate objectives (including generating economic returns to owners);
run the day-to-day operations of the business and;
consider the interests of recognized stakeholders i.e., employees, customers, suppliers, supervisors, governments and the community and
align corporate activities and behaviours with the expectation that banks will operate in a safe and sound manner, and in compliance with applicable laws and regulations; and ofcourse protect the interests of depositors, which is supreme.

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