ASSIGNMENT ON CORPORATE GOVERNANCE

SUBMITTED BY: S.PRIYA PGDM 7A ROLL No. 55

What happened to Satyam? When terrorists attacked Mumbai last November, the media called it "India's 9/11." That tragedy has been succeeded by another that has been dubbed "India's Enron." In one of the the biggest frauds in India's corporate history, B. Ramalinga Raju, founder and CEO of Satyam Computers, India's fourthlargest IT services firm, announced on January 7 that his company had been falsifying its accounts for years, overstating revenues and inflating profits by $1 billion. Ironically, Satyam means "truth" in Sanskrit, but Raju's admission -- accompanied by his resignation -- shows the company had been feeding investors, shareholders, clients and employees a steady diet of asatyam (or untruth), at least regarding its financial performance. Raju's departure was followed by the resignation of Srinivas Vadlamani, Satyam's chief financial officer, and the appointment of Ram Mynampati as the interim CEO. In a press conference held in Hyderabad on January 8, Mynampati told reporters that the company's cash position was "not encouraging" and that "our only aim at this time is to ensure that the business continues." A day later, media reports noted that Raju and his brother Rama (also a Satyam co-founder) had been arrested -- and the government of India disbanded Satyam's board. Though control of the company will pass into the hands of a new board, the government stopped short of a bailout -- it has not offered Satyam any funds. Meanwhile, a team of auditors from the Securities and Exchange Board of India (SEBI), which regulates Indian public companies, has begun an investigation into the fraud. Since Satyam's stocks or American Depository Receipts (ADRs) are listed on the Bombay Stock Exchange as well as the New York Stock Exchange, international regulators could swing into action if they believe U.S. laws have been broken. At least two U.S. law firms have filed classaction lawsuits against Satyam, but given the company's precarious finances, it is unclear how much money investors will be able to recover. According to experts from Wharton and elsewhere, the Satyam debacle will have an enormous impact on India's business scene over the coming months. The possible disappearance of a top IT services and outsourcing giant will reshape India's IT landscape. Satyam could possibly be sold -- in fact, it had engaged Merrill Lynch to explore "strategic options," but the investment bank has withdrawn following the disclosure about the fraud. It is widely believed that rivals such as HCL, Wipro and TCS could cherry pick the best clients and employees, effectively hollowing out Satyam. Another possible impact could be on the trend of outsourcing to India, since India's IT firms handle sensitive financial information for some of the world's largest enterprises. The most significant questions, however, will be asked about

corporate governance in India, and whether other companies could follow Satyam's Raju in revealing skeletons in their own closets. 'Riding a Tiger' Raju was compelled to admit to the fraud following an aborted attempt to have Satyam invest $1.6 billion in Maytas Properties and Maytas Infrastructure ("Maytas" is Satyam spelled backwards) -- two firms promoted and controlled by his family members. On December 16, Satyam's board cleared the investment, sparking a negative reaction by investors, who pummeled its stock on the New York Stock Exchange and Nasdaq. The board hurriedly reconvened the same day and called off the proposed investment. The matter didn't die there, as Raju may have hoped. In the next 48 hours, resignations streamed in from Satyam's non-executive director and Harvard professor of business administration Krishna Palepu and three independent directors -- Mangalam Srinivasan, a management consultant and advisor to Harvard's Kennedy School of Government; Vinod Dham, called the "father of the Pentium chip" and now executive managing director of NEA Indo-US Ventures in Santa Clara, Calif.; and M. Rammohan Rao, the dean of the Indian School of Business in Hyderabad (ISB). Rao had chaired both December 16 board meetings. On January 8, he resigned his position as the ISB dean. In a letter to the ISB community, he explained: "Unfortunately, yesterday's shocking revelations, of which I had absolutely no prior knowledge, mean that we are far from seeing the end of the controversy surrounding Satyam Computers. My continued concern and preoccupation with the evolving situation are impacting my role as dean of ISB at a critical time for the school. Given that my term with ISB anyway ends in a few months, I think that this is an appropriate time for me to step down." Resigning as Satyam's chairman and CEO, Raju said in a letter addressed to his board, the stock exchanges and the market regulator Securities & Exchange Board of India (SEBI) that Satyam's profits were inflated over several years to "unmanageable proportions" and that it was forced to carry more assets and resources than its real operations justified. He took sole responsibility for those acts. "It was like riding a tiger, not knowing how to get off without being eaten," he said. "The aborted Maytas acquisition was the last attempt to fill the fictitious assets with real ones." Specifically, Raju acknowledged that Satyam's balance sheet included Rs. 7,136 crore (nearly $1.5 billion) in non-existent cash and bank balances, accrued interest and misstatements. It had also inflated its 2008 second quarter revenues by Rs. 588 crore ($122 million) to Rs. 2,700 crore ($563

million), and actual operating margins were less than a tenth of the stated Rs. 649 crore ($135 million). Satyam's auditor PricewaterhouseCoopers issued a terse statement: "Over the last two days, there have been media reports with regard to alleged irregularities in the accounts of Satyam.... Price Waterhouse are the statutory auditors of Satyam. The audits were conducted by Price Waterhouse in accordance with applicable auditing standards and were supported by appropriate audit evidence. Given our obligations for client confidentiality, it is not possible for us to comment upon the alleged irregularities. Price Waterhouse will fully meet its obligations to cooperate with the regulators and others." Impact on 'Brand India' The outrage over Raju's admission of systematic accounting fraud has broadened to wider concern about the potential damage to India's appeal for foreign investors and the IT services industry in particular. Immediately following Raju's confession, Satyam's shareholders took a direct hit as the company's share price crashed 77% to Rs. 30 (approximately 60 cents), a far cry from its 52-week high of Rs. 544 ($11.35) last May. "If there were one or two more such accounting scandals in the next six months, it would make international investors more wary," says Wharton management professor Michael Useem. "One example would put people on guard; several examples would be enough to tell big investment money managers that they have to be especially careful working in that Useem also warns against overreacting. "Don't assume other firms are guilty," he says. But he considers the situation to be an "alerting call" for investors to check where their money is, and for auditors and independent directors in all major firms to take a look at the books. Corporate India has tried to contain the damage so far. Rajeev Chandrasekhar, president of the Federation of Indian Chambers of Commerce and Industry, called upon regulators "to move quickly to demonstrate that this is an exceptional case among corporations, and that investors need not worry about Indian corporate governance and accounting standards." Suresh Surana, founder of RSM Astute Consulting Group, said in a statement that the Satyam development is "a major eye opener and will bring into renewed and critical focus the role of independent directors, auditors, company management, [the] CFO and other key persons involved."

"When you have companies that are ostensibly growing their top lines at 30%, 40% or 50%, it is possible to paper over things," Singh says. "Satyam was doing it by boosting sales and profits; Bernie Madoff was doing it by boosting rates of return. When growth rates slow down, you are unable to hide the financial reality of how much cash you actually have. It is possible that during this slowdown period, more scandals will come to light." (U.S. financier Madoff last month admitted to running a $50 billion Ponzi scheme to keep his hedge fund afloat.) Singh adds that companies with "the bluest of blue-chip reputations [such as] Infosys and TCS" could actually gain in the current environment, because of a potential "flight to quality" among client companies. "The thirdtier and weaker companies will probably undergo a lot more scrutiny," he says. According to Ravi Aron, senior fellow at the Mack Center for Technological Innovation at Wharton, the Satyam fallout could affect India's IT offshoring and outsourcing firms in several ways. An immediate impact could be skepticism on the part of clients about whether Indian IT firms can be entrusted with sensitive financial information. "Clients could begin to ask, 'How much do I know about this IT company and its governance?'" says Aron. "Is the IT service provider doing anything that could jeopardize the client's compliance with FASB, Sarbanes Oxley, Basel II or other financial regulations?" Aron recommends that before other IT companies get blackballed because of Satyam's problems, "they should act swiftly to demonstrate that their own operations are squeaky clean." Indian IT companies have always had exceptionally high standards of accounting, and they should ensure that they do not face any spillover effect, he adds. This has already begun to happen. On the day that Raju came clean, N. R. Narayana Murthy, chief mentor at Infosys, was on Indian television -- distancing Infosys and the rest of the IT industry from Satyam's practices. Similarly, Vineet Nayar, CEO of HCL, emailed a personal letter to the company's clients and associates. Describing Satyam's disclosures as "unfortunate," the letter added that Nayar would "reaffirm our commitment that we [will] focus on creating value for our customers with the same passion that we have demonstrated in the past while maintaining the highest ethical and governance standards." Mauro Guillen, a management professor who has studied corporate governance in emerging economies, believes that Indian business has an advantage in arguing that the problem is limited to Satyam and is not systemic. "India is not perceived like Russia -- it is neither everyone's darling nor the plague," he says. "This works to the country's advantage

because it deflects the blame of such occurrences to the way governance works in emerging economies rather than to India. What regulators in India need to do in response to Satyam is to find out quickly if other companies have been doing similar things. The proper response is to deal with and defuse the problem as soon as possible." Guillen notes that what makes Satyam's case unusual is that it had listed its ADRs on the NYSE. "Companies in emerging economies have trouble raising capital at low costs. The literature shows that is the reason they want to list in the U.S., where they accept a higher level of governance in order to raise capital at a lower cost. The fact that Satyam listed its ADRs in the U.S. but still had such serious governance problems makes this case particularly disturbing." Guillen adds, though, that India has several well-regarded IT companies. "If one or two of them don't make the grade, it should not shake investor confidence. It shows that investing in emerging markets is risky. Investors always balance risks and rewards. If the IT sector in India continues to remain competitive, the Satyam episode will just be a footnote in India's business story. If the sector becomes uncompetitive, then that would create a serious problem." Saikat Chaudhuri, a management professor at Wharton, believes the Satyam episode reveals that the pressure on companies to maintain their financial performance is immense. "Satyam always wanted to keep up with the Big Three of Indian IT companies -- TCS, Infosys and Wipro," he notes. "At a time when the IT industry was booming and companies were growing rapidly, it was easy for Satyam to argue that the company was doing well and that it had good governance." The involvement of the board, Chaudhuri adds, was at the "strategic level; in companies like Satyam, it is the owner/promoter/founder who runs the show. It has to do with the ownership structure." In Chaudhuri's view, auditors such as PricewaterhouseCoopers, who signed off on the bogus accounts at Satyam, have a lot more to answer for than the board of directors. "This is a serious lapse on their part. They should have probed." Chaudhuri's advice to other Indian IT firms is to distance themselves from the Satyam fallout through prompt action. "Honesty and transparency will alleviate investor concerns," he says. "I don't believe the sector will come crashing down. Perhaps Indian IT companies will face more scrutiny in the coming months; they may have to answer a few more questions, but India Inc. will pull through." NASSCOM, the National Association of Software and Services Companies, could play a role in helping communicate that "the

Satyam episode, though it shocked everyone, is an isolated instance," he adds. WorldCom and Tyco, Again Useem says that if one were to take an inference from recent high-profile scandals outside of India, "there would be a redoubled effort [in India] on the part of investors and independent directors at other companies to ensure that nothing like what happened at Satyam happens under their noses." Useem draws a parallel between what occurred at Satyam with the scandals at WorldCom and Tyco, rather than at Enron. "At WorldCom, the CFO and the CEO were knowingly misstating the accounting and financials of the firm; at Tyco, the CEO and the CFO were knowingly taking money from the company for personal purposes," he says. "Satyam's disaster has a parallel to these acts of malfeasance." Useem recalls the CEO and promoter of a Chinese solar panel company who "wanted his company to be extremely well governed" and therefore listed it on the New York Stock Exchange. "He wanted a great board of directors and thus listed the company fully on the NYSE -- not as an ADR -- for the sole purpose ... of forcing himself to be disciplined in the governance policies his company pursues." If it survives, Satyam may be able to redeem itself with new management and governance codes, Useem says. He recalls working as a consultant a couple of years ago with Tyco, where the company's new CEO Ed Breen systematically went about cleaning up after the departure of disgraced CEO Dennis Kozlowski, instituting strong corporate governance practices. Tyco is one of the best examples of a corporate governance turnaround, Useem notes. Singh adds that the Satyam scandal doesn't necessarily warrant more regulation. "There is no need to strengthen corporate governance regulations [in India]," he says. "The issue is really more one of leadership at the board level. The tone gets set by the chairman of the board; it's much more a matter of culture within the board room, of the group dynamics within the board." Truth in Numbers Notwithstanding Raju's confession, the Satyam episode has brought into sharp relief the role and efficacy of independent directors. SEBI requires

Indian publicly held companies to ensure that independent directors make up at least half their board strength. The knowledge available to independent directors and even audit committee members is inherently limited to prevent willful withholding of crucial information, Singh notes. "The reality is, at the end of the day, even as an audit committee member or as an independent director, I would have to rely on what the management was presenting to me," he says, drawing upon his experience as an independent director and audit committee member at Fedders, a publicly held company in the U.S. that filed for bankruptcy last year. "It is the auditors' job to see if the numbers presented are accurate." Even if outside directors were unaware of the true state of Satyam's finances, some red flags should have been obvious. According to Aron, Satyam is one of the world's largest implementers of SAP systems. In an effort to compete against Satyam, HCL recently acquired Axon, an SAP consulting firm, at a cost of $800 million. Aron notes that any Satyam director should have been puzzled that the company was proposing to invest $1.6 billion in real estate at a time when a competitor as formidable as HCL was gunning for one of its most lucrative markets. "IT is a highly capitalintensive business, especially in India," says Aron. "What on earth would compel Satyam to invest $1.6 billion in real estate at a time when competition with HCL was about to grow more intense? That is what the directors should have been asking." Instead, he adds, like the dog that didn't bark in the Sherlock Holmes story, the matter was allowed to slide. How effective independent directors can be is mainly a factor of the "dynamics inside the board room once the doors are closed," according to Singh. "There is an attitude in some Indian companies that the board members actually work for the people who have brought them onto the board. This is a completely misguided attitude. It looks like this may have been a problem at Satyam.... The real strength of a healthy board is when a consensus gets overturned by a dissenting view." Even if the proposed investment in the two Maytas firms appeared to be ethical on first sight, Singh notes that he would have expected the independent directors to be extra careful. "Given the fact that there is a family connection involved, as an independent board member I would be looking very hard at whether this is the right decision for the company," he says. "Also, quite aside from issues of governance, everything we know about unrelated diversification [deals] from management literature is that, as a general matter, they are not a good idea; they don't seem to make strategic sense."

Independent Defectors Useem wonders if the Satyam directors who resigned actually did the right thing. "The leadership dictum is that you need to stay the course, stay in the game, face the problem and solve the problem," he says. "Did the four directors who resigned have an option of banding together, staying on the board and changing governance?" Useem adds that "it is often very hard to stay the course. I am empathetic with people who have difficulty [making that decision]." Media reports quoted former independent director Srinivasan as saying she accepted "moral responsibility" for failing to cast a dissenting vote on the Maytas proposal. Some of the other directors who resigned have cited difficulties in attending frequent board meetings. Useem says it can indeed prove challenging for independent directors to go through reams of documents and attend frequent board meetings that companies in distress typically have. In a written response to Knowledge@Wharton, Palepu, Satyam's former non-executive director, stated that he was not present at the board meetings where the Maytas investment proposals were discussed. "As a result, under Indian law, I was not eligible to vote on the proposals," he said. Palepu earned nearly Rs. 1 crore (about $200,000) from Satyam in 2007, according to regulatory filings, most of it for rendering "professional services." He declined comment, but those services were essentially leadership development and consulting for Satyam's top management, according to Archana Muthappa, the company's head of media relations. SEBI and India's registrar of companies have launched an investigation into Satyam. Citing the Indian Securities Contract Regulation Act of 1956, a report in The Economic Times says SEBI is empowered to award penalties of up to Rs. 25 crore and imprisonment of up to 10 years to directors and management executives "for violating the listing agreement by making false and inaccurate disclosures in the company's quarterly and annual results." Singh says it is important to remember who the ultimate victims are in cases like Satyam. "This is a real tragedy; the people who will be left holding the bag will be the shareholders." Even as Raju is widely blamed for unleashing "India's Enron," Chaudhuri points to a major difference between Enron and Satyam. "At Enron, the CEO stonewalled, while whistle-blowers came out with the truth," he says. "At Satyam, there were no whistle-blowers. The CEO blew the whistle on himself." In that sense, Raju did -- ultimately -- tell the truth and perhaps

live up to the "Satyam" name. Unfortunately for him, the company, and India's IT industry, by then it was much too late.

Ques 2 Take 3 listed companies and give status of their corporate governance Ans 2 RELIANCE Board composition The Companys policy is to maintain optimum combination of Executive and Non-Executive Directors. The Board consists of 13 Directors, out of which 7 are independent Directors. The composition of the Board and category of Directors is as follows: Category Promoter Director Name of Directors Mukesh D. Ambani Chairman and Managing Director Nikhil R. Meswani Hital R. Meswani P.M.S. Prasad Pawan Kumar Kapil Ramniklal H. Ambani Hardev Singh Kohli Mansingh L. Bhakta Yogendra P. Trivedi Dr. Dharam Vir Kapur Mahesh P. Modi Prof. Ashok Misra Prof. Dipak C. Jain Dr. Raghunath A. Mashelkar

Executive Directors

Non-Executive NonIndependent Directors Independent Directors

Board Meetings, Board Committee Meetings and Procedures The Board has constituted seven standing Committees, namely Audit Committee Corporate Governance and Stakeholders Interface Committee

Employees Stock Compensation Committee Finance Committee Health, Safety and Environment Committee Remuneration Committee and Shareholders/Investors Grievance Committee.

The Board is authorised to constitute additional functional Committees, from time to time, depending on the business needs. (i)Minimum six pre-scheduled Board meetings are held every year. Apart from the above, additional Board meetings are convened by giving appropriate notice to address the specific needs of the Company. In case of business exigencies or urgency of matters, resolutions are passed by circulation. (ii) The meetings are usually held at the Companys office at Maker Chambers IV, 222, Nariman Point, Mumbai 400021. (iii) All divisions/departments of the Company are advised to schedule their work plans well in advance, particularly with regard to matters requiring discussion/approval/decision at the Board/Board Committee meetings. All such matters are communicated to the Company Secretary in advance so that the same could be included in the agenda for the Board/Board Committee meetings. (iv) The Board is given presentations covering Finance, Sales, Marketing, major business segments and operations of the Company, global business environment, all business areas of the Company including business opportunities, business strategy and the risk management practices before taking on record the quarterly/annual financial results of the Company. 1. Audit Committee Composition: The Audit Committee of the Board comprises three independent directors namely Shri Yogendra P. Trivedi, Chairman, Shri Mahesh P. Modi and Dr. Raghunath A. Mashelkar. All the members of the Audit Committee possess financial/accounting expertise/ exposure. The composition of the Audit Committee meets with the requirements of Section 292A of the Companies Act, 1956 and Clause 49. Shri Vinod M. Ambani is the Secretary to the Audit Committee. Objective: The Audit Committee assists the Board in its responsibility for overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal and regulatory requirements. The Committees purpose is to oversee the accounting and financial reporting process of the Company, the audits of the Companys financial statements, the appointment, independence, performance and remuneration of the statutory auditors, the performance of internal auditors and the Companys risk management policies.

Six meetings of the Audit Committee were held during the year ended March 31, 2011, as against the minimum requirement of four meetings.

2. Corporate Governance and Stakeholders Interface (CGSI) Committee Composition: The Corporate Governance and Stakeholders Interface Committee of the Board comprises three Independent Directors, namely, Shri Yogendra P. Trivedi, Chairman, Dr. Dharam Vir Kapur and Shri Mahesh P. Modi. One meeting of the Corporate Governance and Stakeholders Interface Committee was held during the year ended March 31, 2011. 3. Employees Stock Compensation Committee Composition: The Employees Stock CompensationCommittee of the Board comprises four Directors, namely,Shri Yogendra P. Trivedi, Chairman, Shri Mahesh P. Modi, Prof. Dipak C. Jain and Shri Mukesh D. Ambani. One meeting of the Employees Stock Compensation Committee was held during the year ended March 31, 2011. 4. Finance Committee Composition: The Finance Committee of the Board comprises three Directors, namely, Shri Mukesh D. Ambani, Chairman, Shri Nikhil R. Meswani and Shri Hital R. Meswani. Eight meetings of the Finance Committee were held during the year ended March 31, 2011. 5. Health, Safety and Environment (HS&E) Committee Composition: The Health, Safety and Environment Committee of the Board comprises three Directors, namely, Shri Hital R. Meswani, Chairman and Dr. Dharam Vir Kapur and Shri Pawan Kumar Kapil (w.e.f. May 16, 2010). Four meetings of the Health, Safety and Environment Committee were held during the year ended March 31, 2011. 6. Remuneration Committee Composition: The Remuneration Committee of the Board comprises three Independent Directors, namely, Shri Mansingh L. Bhakta, Chairman, Shri Yogendra P. Trivedi and Dr. Dharam Vir Kapur.

Two meetings of the Remuneration committee were held during the year in which all the members were present. 7. Shareholders / Investors Grievance Committee Composition: The Shareholders/Investors Grievance Committee of the Board, comprises four Directors, namely, Shri Mansingh L. Bhakta, Chairman, Shri Yogendra P. Trivedi, Shri Nikhil R. Meswani and Shri Hital R. Meswani. Four meetings of the Shareholders/Investors Grievance Committee (SIGC) were held during the year ended March 31, 2011. Number of Board meetings held and the dates on which held Eight Board meetings were held during the year, as against the minimum requirement of four meetings. The Company has held at least one Board meeting in every three months. The details of the Board meetings are as under: Sl.No. Date Board No. of Directors present Strength 1. April 23, 2010 13 13 2. May 11, 2010 13 12 3. June 07, 2010 13 07 4. July 27, 2010 13 13 5. October 30, 2010 13 13 6. November 29, 2010 13 13 7. January 21, 2011 13 13 8. February 20, 2011 13 07

ICICI 1. Companys philosophy on code of governance Our corporate governance policies recognise the accountability of the Board and the importance of its decisions to all our constituents, including customers, investors, employees and the regulatory authorities, and to demonstrate that the shareholders are the cause of and ultimate beneficiaries of our economic activities. The functions of the Board and the executive management are well-defined and are distinct from one another. We have taken a seriesof steps including the setting up of sub-committees of the Board to oversee the functions of executive management. These sub-committees of the Board which mainly consists of non-executive directors, meet regularly to discharge their objectives.

2. Board of Directors Our Board consists of eight members, and is responsible for the management of our business. The Boards role, functions, responsibility and accountability are clearly defined. In addition to its primary role of monitoring corporate performance, the functions of the Board include : approving corporate philosophy and mission; participating in the formulation of strategic and business plans; reviewing and approving financial plans and budgets; monitoring corporate performance against strategic and business plans, including overseeing operations; ensuring ethical behaviour and compliance with laws and regulations; reviewing and approving borrowing limits; formulating exposure limits; and keeping shareholders informed regarding plans, strategies and performance. To enable the Board to discharge its responsibilities effectively, our executive management places detailed reports on our performance on a quarterly basis. The composition of our Board reflects the principal shareholdings held by ICICI and the requirements of the Banking Regulation Act, 1949. The following are the members of the Board : Shri K. V. Kamath Nominee Director of ICICI Limited (Promoting Company of the Bank) having specialized knowledge of finance. Smt. Lalita D. Gupte Nominee Director of ICICI Limited (Promoting Company of the Bank) having specialized knowledge of finance Shri R. Rajamani Independent Non-Executive Director having specialised knowledge of banking, finance and administration Shri B. V. Bhargava Independent Non-Executive Director having specialised knowledge of finance and law Shri Somesh R. Sathe Independent Non-Executive Director having specialised knowledge of small scale industries Dr. Satish C. Jha Independent Non-Executive Director having specialised knowledge of agriculture and rural economy Shri Uday M. Chitale Independent Non-Executive Director - a chartered accountant by profession Shri H. N. Sinor Managing Director and Chief Executive Officer having specialised knowledge of banking, finance and administration The meetings are generally chaired by Shri K. V. Kamath. 15 meetings of the Board (BM) were held during the period April 1, 1999 to March 31, 2000. They were held on 22.4.1999, 26.5.1999, 14.6.1999, 23.7.1999, 25.8.1999, 27.9.1999, 27.10.1999, 30.11.1999, 14.12.1999, 27.12.1999, 19.1.2000, 24.1.2000, 9.2.2000, 21.2.2000 and 14.3.2000. 3. Audit and Risk Committee The Audit and Risk Committee consists of five directors, all of which are independent directors. It provides direction to and oversees the audit and risk management function, reviews the financial accounts, interacts with statutory auditors and reviews matters of special interest. Shri Uday M. Chitale, Smt. Lalita D. Gupte, Shri R. Rajamani, Shri B. V. Bhargava and Dr. Satish C. Jha are the members of the Committee. The meetings are generally chaired by Shri Uday M. Chitale. 6 meetings of the Audit and Risk Committee

(ARCM) were held during the period April 1, 1999 to March 31, 2000. They were held on 22.4.1999, 23.7.1999, 25.8.1999, 27.9.1999, 30.11.1999 and 21.2.2000. 4. Committee of Directors The Committee of Directors consists of five directors, including the Managing Director and Chief Executive Officer. This Committee has delegated financial powers and approves loan proposals and expenditures within the broad parameters of the delegated authority. Shri K. V. Kamath, Smt. Lalita D. Gupte, Shri B. V. Bhargava, Shri Uday M. Chitale and Shri H. N. Sinor are the members of the Committee. The meetings are generally chaired by Shri K. V. Kamath. 15 meetings of the Committee of Directors (CODM) were held during the period April 1, 1999 to March 31, 2000. They were held on 22.4.1999, 13.5.1999, 26.5.1999, 14.6.1999, 8.7.1999, 23.7.1999, 5.8.1999, 25.8.1999, 27.9.1999, 27.10.1999, 19.11.1999, 30.11.1999, 27.12.1999, 21.2.2000 and 14.3.2000. 5. Compensation Committee The Compensation Committee consists of four directors, including the Managing Director and Chief Executive Officer. The functions of the committee include considering and recommending to the Board the amount of compensation payable to the executive directors, fees payable to other directors and framing the guidelines for and management of the employee stock option scheme. Smt. Lalita D. Gupte, Shri Somesh Sathe, Shri Uday M. Chitale and Shri H. N. Sinor are the members of the Committee. The meetings are generally chaired by Smt. Lalita D. Gupte. 4 meetings of the Compensation Committee (CCM) were held during the period April 1, 1999 to March 31, 2000. They were held on 22.4.1999, 24.1.2000, 21.2.2000 and 14.3.2000. 6. Nomination Committee The Nomination Committee consists of four directors, including the Managing Director and Chief Executive Officer. The functions of the committee include the submission of recommendations to the Board to fill vacancies on the Board or in senior management positions. Shri K. V. Kamath, Shri R. Rajamani, Shri B. V. Bhargava and Shri H. N. Sinor are the members of the Committee. The meetings are generally chaired by Shri K. V. Kamath. 3 meetings of the Nomination Committee (NCM) were held during the period April 1, 1999 to March 31, 2000. They were held on 22.4.1999, 21.2.2000 and 14.3.2000. 7. Share Transfer Committee The Share Transfer Committee consists of four directors, including the Managing Director and Chief Executive Officer. This committee reviews and approves transfers of equity shares and debentures.

Smt. Lalita D. Gupte, Shri B. V. Bhargava, Shri Uday M. Chitale and Shri H. N. Sinor are the members of the committee. The meetings are generally chaired by Shri B. V. Bhargava. 27 meetings of the Share Transfer Committee (STCM) were held during the period April 1, 1999 toMarch 31, 2000. They were held on 15.4.1999, 22.4.1999, 13.5.1999, 26.5.1999, 3.6.1999, 29.6.1999, 8.7.1999, 23.7.1999, 5.8.1999, 25.8.1999, 15.9.1999, 27.9.1999, 18.10.1999, 27.10.1999, 19.11.1999, 30.11.1999, 20.12.1999, 27.12.1999, 14.1.2000, 19.1.2000, 9.2.2000, 21.2.2000, 2.3.2000, 8.3.2000, 14.3.2000, 18.3.2000 and 23.3.2000. Shri Bhashyam Seshan, Company Secretary, is the Compliance Officer of the Company. During the financial year ended March 31, 2000, the Company received 2,597 complaints, resolved 2,589 complaints and 8 complaints were pending.

The details of attendance of Directors at the meetings of the Board and various committees of the Board duing the period from April 1, 1999 to March 31, 2000 were as follows : Names of the Directors No. of meetings attended BM ARCM CODM CCM NCM STCM (15) (6) (15) (4) (3) (27) Shri K. V. Kamath 12 N. A. 11 N. A. 3 N. A. Smt. Lalita D. Gupte 13 5 13 4 N. A. 20 Shri R. Rajamani 13 5 N. A. N. A. 2 N. A. Shri B. V. Bhargava 13 5 11 N. A. 3 23 Shri Somesh R. Sathe 15 N. A. N. A. 4 N. A N. A. Dr. Satish C. Jha 1 14 N. A. N. A. N. A. N. A. N.A. Shri Uday M. Chitale 14 6 15 3 N. A. 24 Shri H. N. Sinor 15 N. A. 15 4 3 24 The previous Annual General Meeting was held on Monday, June 14, 1999 and the last extraordinary general meeting was held on Monday, February 21, 2000. Smt. Lalita D. Gupte, Shri R. Rajamani, Shri Somesh R. Sathe, Dr. Satish C. Jha, Shri Uday M. Chitale and Shri H. N. Sinor, Directors, were present at the Fifth Annual General Meeting. Shri K.V. Kamath, Smt. Lalita D. Gupte, Shri R. Rajamani, Shri B. V. Bhargava, Shri Somesh R. Sathe, Dr. Satish C. Jha, Shri Uday M. Chitale and Shri H. N. Sinor, Directors, were present at the Third Extraordinary General Meeting.

INFOSYS
Corporate governance at Infosys is a value-based framework to manage our Company affairs in a fair and transparent manner. As a responsible corporation, we use this framework to maintain accountability in all our affairs, and employ democratic and open processes. We have evolved guidelines and best practices over the years to ensure timely and accurate disclosure of information regarding our financials, performance, leadership and governance of the Company.

The Board of Directors (the Board) is at the core of our corporate governance practice and oversees how the Management serves and protects the long-term interests of all our stakeholders. We believe that an active, well-informed and independent Board is necessary to ensure the highest standards of corporate governance.

The majority of our Board, eight out of 14, are independent members. Further, we have audit, compensation, investor grievance, nominations and risk management committees, which comprise independent directors. Board composition Size and composition of the Board The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and to separate its functions of governance and management. Currently, the Board consists of 14 members, five of whom are executive or whole-time directors, one is non-executive and eight are independent directors. Three of the executive directors are our founders. The Board believes that the current size is appropriate, based on our present circumstances. The Board periodically evaluates the need for change in its composition and size.

Board meetings Scheduling and selection of agenda items for Board meetings Dates for Board meetings in the ensuing year are decided in advance and published as part of the Annual Report. Most Board meetings are held at our registered office at Electronics City, Bangalore, India. Attendance of directors during fiscal 2011 Name of the director N. R. Narayana Murthy S. Gopalakrishnan Prof. Marti G. Subrahmanyam Deepak M. Satwalekar Dr. Omkar Goswami Sridar A. Iyengar David L. Boyles Prof. Jeffrey S. Lehman K. V. Kamath R. Seshasayee K. Dinesh S. D. Shibulal T. V. Mohandas Pai Srinath Batni Note: All the above directors attended the Annual General Meeting held on

No. of meetings Held Attended 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 1 1 5 5 5 5 5 5 5 5

Availability of information to Board members The Board has unfettered and complete access to any information within the Company, and to any of our employees. At Board meetings, managers who can provide additional insights into the items being discussed are invited. Board committees Currently, the Board has five committees: audit committee, compensation committee, nominations committee, investor grievance committee and risk management committee. All committees consist entirely of independent directors. The Board, in consultation with the nominations committee, is responsible for constituting, assigning, co-opting and fixing terms of service for committee members. It delegates these powers to the nominations committee. The Chairperson of the Board, in consultation with the Company Secretary and the committee chairperson, determines the frequency and duration of the committee meetings. Normally, all the committees meet four times a year. Recommendations of the committees are submitted to the entire Board for approval. The quorum for meetings is either two members or one-third of the members of the committee, whichever is higher. 1. Audit committee Our audit committee (the committee) comprises five independent directors : Deepak M. Satwalekar, Chairperson Prof. Marti G. Subrahmanyam Sridar A. Iyengar K. V. Kamath R. Seshasayee In India, we are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). In the U.S., we are listed on the NASDAQ Global Select. In India, Clause 49 of the Listing Agreement makes it mandatory for listed companies to adopt an appropriate audit committee charter. The Blue Ribbon Committee set up by the U.S. Securities and Exchange Commission (SEC) recommends that every listed Company adopt an audit committee charter. This recommendation has also been adopted by NASDAQ. In our meeting on May 27, 2000, our committee adopted a charter which meets the requirements of Clause 49 of the Listing Agreement with Indian stock exchanges and the SEC.

2. Compensation committee Our compensation committee (the committee) comprises four independent directors. They are: K. V. Kamath, Chairperson Prof. Jeffrey S. Lehman David L. Boyles Dr. Omkar Goswami The purpose of the committee of the Board of Directors (the Board) shall be to discharge the Boards responsibilities related to compensation of the Companys executive directors and senior management. The committee has the overall responsibility of approving and evaluating the compensation plans, policies and programs for executive directors and senior management. 3. Nominations committee Our nominations committee (the committee) comprises three independent directors : Prof. Jeffrey S. Lehman, Chairperson Deepak M. Satwalekar K. V. Kamath The committee also makes recommendations to the Board on candidates for: 1. Nomination for election or re-election by the shareholders; and 2. Any Board vacancies that are to be filled by the Board. 4. Investor grievance committee Our investor grievance committee (the committee) comprises four independent directors : Dr. Omkar Goswami, Chairperson Deepak M. Satwalekar Prof. Marti G. Subrahmanyam R. Seshasayee 5. Risk management committee Our risk management committee (the committee) is comprised of four independent directors: David L. Boyles, Chairperson Sridar A. Iyengar Dr. Omkar Goswami

Prof. Jeffrey S. Lehman