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In India, both the Birla Committee Report and the CII code, which have underscored the role of the Board of Directors in ensuring good corporate governance, have recommended that the Board of Directors should have an optimum combination of executive & non-executive directors. The non-executive directors should comprise at least 30% of the board if one of them is the Chairman.
The non-executive directors should comprise at least 50% of the board if the chairman and the managing director is the same person.

The CII code has also laid down that no individual should be a director on the boards of more than 10 companies at any given time; Non-executive directors should be active, have defined responsibilities, and be conversant with P&L accounts. The board should be informed at operating plans and budgets, Long term plans, quarterly divisional results and internal audit reports.

(2) Shareholders

The shareholders are the owner of the company and as such they have certain rights and responsibilities. A good corporate framework is one that provides adequate revenues to the shareholders for effective contribution in the governance of the company, while consisting on a high standard of corporate behaviour without getting involved in the day-to-day functioning of the company.

Countries vary in their mix of types of shareholders. At one extreme, the US and UK have mostly arms length, neutral shareholders, who are focused on shareholder value maximization. Although many UK shareholders are large institutions, such as pension funds, these generally play passive roles, compared with the shareholders activism that arose in the US among institutional investors such as Calpers. Japan has plenty of institutional shareholders but these tend not to be neutral and often act as part of a network, or keiretsu, that supports the role of the company and, hence, incumbent management. Germany's main trait is that banks play a leading role influencing corporate policy at many countries, both as lenders and shareholders.

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* Contributed by: -
Dr. R. P. Verma,
Ex. H.O.D. & Dean, Commerce and Business Management Dept.,
Arabinda Bhandari,
Strategic Management Researcher,
Ranchi University, Ranchi.