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Satyam Computers Corporate Governance Fiasco (B): The Role of Independent Directors


Code : GOV0034

Year :

Industry : Business Law, Governance and Ethics

Region : India

Teaching Note: Available

Structured Assignment : Available

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Board of Directors: Roles and Responsibilities Board of Directors (BoD) is deemed to be a body of visionaries and leaders appointed to manage the affairs of a firm by vetting the decisions of the management, with intentions of securing the future of the company. Comprising of veterans from a wide cross section of the industry, the board’s main purpose is to achieve the aims of the company laid out in the Memorandum of Association and regulations defined in the Articles of Association by collectively directing the affairs of the company without sacrificing the interests of its shareholders and stakeholders. BoD is also known as the board of governors, board of trustees, board of managers or executive board. However, it is popularly known as ‘Board’. As for Indian regulations, the Companies Act of 1956 defined the composition, roles and responsibilities of BoD, individual directors as well as the chairman...

Composition of the Board OThe board of a company comprises of a chairman and directors, whose number is fixed by the shareholders.As far as the composition of the board is concerned, the ultimate power rests with the real owners of the company, i.e., shareholders, who play amajor role in the election, appointment and sometimes even in the dismissal of directors. The board can elect a chairman and can even appoint directors but it does not hold the authority to remove any one of the directors. A director may be removed only after a special resolution to that effect is passed by a majority vote of shareholders under a special procedure, which demands a legal advice...

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Role of the Board The board plays a crucial role in determining the vision and strategies that guide the company’s operations. It constantly reviews the strengths, weaknesses, opportunities and threats of the company to make strategic decisions. In this endeavour, the board ensures that the company’s organisational structure is compatible for implementing the strategic plans. Besides delegation of authority to the management, the board is accountable to the shareholders and stakeholders. It also enables transparency in company’s operations bymaintaining healthy relations, promoting goodwill and support to both ends. The board meets regularly to discuss and decide on the operations of the company. The proceedings of the meetings are documented as ‘minutes of the meeting’ to avoid any future disputes and circulated to the shareholders so as to keep them informed...

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