Transcript Nihal Fonseka, DFCC Bank

Good Corporate Governance
in Practice
Outline
 What is Corporate Governance?
 Regulatory Requirements for Banks in Sri Lanka
 DFCC Practices - Key Elements
 Code of ethics
 Enterprise Governance
 Board Composition
 Board Responsibilities
 Investor relations
 Role of Company Secretary
 Disclosure
What is Corporate Governance?
 Many definitions
 “The framework of rules and practices by which a board
of directors ensures accountability, fairness, and
transparency in a company’s relationship with its all
stakeholders (financiers, customers, management,
employees, government, and the community)”.[Source:
Business Dictionary.com]
Regulatory Requirements for
Banks in Sri Lanka
Mandatory and prescriptive direction issued by Central Bank of Sri Lanka.
 Key elements:
 Board composition
 Qualifications for directors
 Demarcation of the roles of Chairman and CEO
 Prescribed duties and qualifications for Board
 Identification of Related Parties and prescribed procedures for
Related Party transactions
 Mandatory disclosures in the Annual Report
Code of Ethics
Based on OECD principles of good governance
 Corporate Values
 Whistle blowing policy
 Customer Charter
 Social Responsibility
 Closed period-dealing in Co shares, directors/employees
Enterprise Governance
 Strategy formulation
 Review of performance
 Alignment of performance targets to KPI’s
 Risk Management
 Legal & Regulatory framework
 Delegation – extent & review
 Division of responsibility
 Transparency
Board Composition
 Directors - Executive/Non executive
 Non executive Chairman
 Independence of Directors
 Separation of Chairman and Chief Executive Officer
 Board Committees
 Board Nomination policy
 Self Assessment
Board Responsibility
 Act with good faith with due diligence and care
 Treat all stakeholders fairly
 Review of corporate strategy
 Role of chairman – leadership & stimulates discussion
 Attendance at Board meetings
 Policy on independent professional advice
 Oversight of related party transactions
 Avoidance of conflicts of interest
 Identification of matters reserved for Board
Investor Relations
 Communication Policy
 Timely reporting of financial performance
 Dissemination of price sensitive information
 Timely notification of shareholder meetings/agenda
 Free transferability of shares
 Equal rights
 Maintenance of help desk
Role of Company Secretary
 Statutory & regulatory functions
 Secretariat services to Board/shareholders
 Access to Directors
 Guidance on directors responsibilities
 Minutes of meetings
 Directors’ interest register
Disclosures
 Financial and operating results
 Corporate objectives
 Major share ownership
 Remuneration of Board & Key management
 Related party transactions
 Risk framework
 Internal Control framework
 Auditors report – external & internal