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      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
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      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
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      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
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New Directors - Have you done your due diligence

New Directors - Have you done your due diligence

By Neha Shah-Founder, MentorMyBoard
Calendar

Jan 09 th 2021

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Are you a New Director who has joined a board of public limited/ listed company as Independent Director? Are you a Director who has joined the Board of a private limited company as a professional director/ executive director or even joined the Advisory Board of an organization or Corporate NGO?


Have you done your due diligence before joining the Board? No? Then, here is the blog you must read!


When You join any Board in any capacity whether executive or non-executive, whether professional or independent position, you may have seen the Annual Report of the Company, you may have seen the website of the company and you may have seen the Profile of the Company. But does that provide you the correct information about the company? Those are the documents prepared by the company and speak what company wants you to read but not what you must read or know. So let’s understand how you can conduct your own due diligence before joining any Board and what are the sources of such crucial information?


1.       First and foremost crucial document is Memorandum and Articles of Association which helps you understand key aspects of company’s area of operations, governance framework etc.

2.       Regular and up-to-date financial statements of the Company as filed by the Company with Ministry of Corporate  Affairs on its web portal www.mca.gov.in also can give you true and fair view of the financial position of the Company.

3.       Social Media News, reviews and updates about the Company, its culture, mindset of top management is now easily accessible on single click for you now a days.

4.       In case of Listed Companies, comparison of share price trends with index and peer group can give you fair idea about market capitalisation and size of the Company. Also Public Announcements made on the Stock Exchanges by the Company gives you fair idea about the recent corporate actions and stakeholders relationships. From the Shareholding patterns submitted with the stock exchanges, you can also check the movement of Promoters Shareholding, controlling stake of the Company, top Shareholders of the Company and so on.

5.       All relevant policies and procedures such as code of conduct, CSR Policy, Vigil Mechanism, whistle blower policy, policy on preservation of documents, HR Policies etc.

6.       Press Releases made by the Company for last 3 to 5 years

7.       Further, now you can also view information about the CIBIL score of the Company, its promoters on the Government Portal. Also check on the name of the Company in the RBI Defaulters List, Vanishing Companies List published by MCA and so on. Links of important websites is shared at the end of this article.

8.       Even Job Web Portals like Glassdoor etc. will provide you information about the Employee Satisfaction levels and Positive/ Negative Experiences of Employees who leave the organizations.


There are various other regulators who provide information for due diligence on companies whether they are defaulting, their identity is genuine, their compliance system is updated, their returns filings are on time, track record of promoters, genuineness of the registered office and so on.


Have you already joined the Board of any company either in Executive/ Non Executive/ independent/ Professional capacity or merely in Advisory capacity, then undertake due diligence based on following additional documents to which you may have access to as Directors / Advisor of the Company:


1.       Strategy Documents, Business Plans of the Company which will give you idea and knowledge on the vision of the company and the promoters.

2.       Minutes of Previous Years Meetings of Board as well as shareholders of the Company. Minutes are an important evidences in the Court of Law and specially become crucial in cases where fraudulent activities / siphoning of money etc. are undertaken by promoters

3.       Details of any significant legal actions against the company, notices issued by Government/ Semi Government Departments for violations of some important legal provisions. This is most critical aspect to identify if any contingent liabilities on account of litigations, penalties may arise.

4.       Management Succession plans prepared by the Company which will help you get hands on to the mind-set of promoters on stakeholders’ wealth creation, business succession and continuity plans.

5.       Risk assessment measures and procedures of identification of high risk areas.

6.       Quarterly Financial Results, budgets, and other financial ratios towards the performance of the company.

7.       Board processes, Board practices prevailing in the Company will help you to understand how the information is provided to the Boards by the Management, level of disclosures, level of reporting structures to the Board.

I am sure, this broad checklist will help you get hands on information on importance of due diligence while joining any Board as Directors or Advisors and also how to keep yourself updated about the working, functioning of the Companies. In case, you feel, you need help or assistance on due diligence for yourself to protect you from unforeseen liabilities, MentorMyBoard can help you conduct Liability Audit, Due Diligence with our expert team members who conduct in-depth analysis of the company and help you with the simple and easy to understand reports for better and informed decisions. Our team can be reached on support@mentormyboard.com for further help and assistance.

Your Suggestions, queries and feedbacks are most welcome.

Neha Shah

Founder- MentorMyBoard


Comments

Anonymous
Anonymous

February 02, 2021

Good article

Leave a Reply

Category

  • All
  • Boardrooms
  • BOARDROOMS
  • Independent Directors
  • Role of Board
  • Mindset Shifts of Boards
  • Independent Directors and Promoters
  • Sustainability / ESG
  • business implication
  • employee exits
  • COMMITTEE MEETINGS
  • Union Budget
  • Independent Director
  • Grow with Governance
  • Grow with Governance
  • INDEPENDENT DIRECTOR
  • Entrepreneurial Board
  • ESG & ITS IMPORTANCE
  • leadership coaching
  • Change Management
  • Advisory Boards
  • Boards
  • Boardroom
  • Brand Yourself as a Leader of the Company
  • Kindness
  • Are you hesitant to speak in the Boardroom!
  • Governance & ESG
  • Directors
  • Independent Directors
  • Corporate Governance
  • Leader development
  • Gratitude, Purpose
  • decision making
  • Systematic Investment Plans in Emotional Intelligence
  • Corporate Governance
  • The Board’s Role in ESG!
  • Balance Boards
  • Agility and Compassion
  • Governance and Board
  • Diversity and Inclusion
  • Directors,Promoter Directors
  • Board Members, Directors and Independent Directors
  • Board and Senior Management
  • New Directors
  • Cyber Insurance
  • Salary Increment
  • Economy Growth
  • Human Resources
  • Generating Wealth Beyond Money
  • Agile Mindset for Leadership
  • Aspiring Independent Directors
  • Board Leadership
  • Corporate Governance & Women on Boards
  • BOARD MEMBER
  • SME
  • WOMEN DIRECTOR
  • BOARD MEMBERS

Archive

  • 2021
    • April (3)
      • Will you drive your vehicle without a dashboard?
      • Are you making SIPs to improve your Emotional Intelligence
      • Corporate Governance needs a Moral Compass – Ethics in Indian Boardrooms!
    • August (9)
      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
      • The winding road of leadership coaching in the post-pandemic era
      • Challenges of Organizational Culture Change
    • February (4)
      • Re-examination of Purpose by the Boards in Post -Pandemic Era
      • What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors
      • Promoter Director – Time to become Custodian of Governance!
      • Diversity and Inclusion – The Board Perspective!
    • January (2)
      • New Directors - Have you done your due diligence
      • Cyber Security Insurance and Boards
    • July (7)
      • Why Advisory Boards Are Important for Indian Business Corporates?
      • Grow with Governance: ESG essential to repair the damage economic activities caused to the earth, says CA Shailesh Haribhakti
      • Top 10 areas to contribute in Boards as Independent Directors
      • Top 10 Questions to Ask in Boardrooms!
      • Essential HOWs of Boardroom!
      • Kindness is key
      • How to Brand Yourself as a Leader of the Company?
    • June (6)
      • Leading from the Boardroom
      • Are you hesitant to speak in the Boardroom!
      • The Neem Project a Leadership case study
      • Directors Liability in India
      • Why do promoters need Independent Directors?
      • Corporate Governance Deviation – Infosys Case Study
    • March (4)
      • Board Refreshment: Finding the Right Balance for your Board!
      • HR Governance and Board – How Important Is It?
      • Agility and Compassion: Two Pillars for Boards in the Post Pandemic Era!
      • Modernizing Governance: The Board’s Role in ESG!
    • May (3)
      • Restructuring appraisals in 2021 – Gratitude, Purpose & Meritocracy
      • How do you make your personal Brand?
      • Leadership Coaching: How does it help Leaders
    • October (2)
      • Are Independent Director’s required on the Board?
      • 'Ethics & Governance' lesson should start from school, says Federal Bank's Independent Director, Sankarshan Basu
    • September (3)
      • Grow with Governance: As an Independent Director ensure your voice is heard, says Apurva Purohit
      • Grow with Governance: Push for ESG agenda; pool CSR funds to maximise impact, says Ranganath NK, former MD of Grundfos Pumps
      • Grow with Governance: Boards should prepare companies for different risks, says National Insurance Academy's G Srinivasan
  • 2020
    • August (4)
      • WOMEN DIRECTOR-An Emerge
      • ARE YOUR BOARD MEMBERS SAVVY WITH FINANCIAL TERMS AND EXCEL IN FINANCIAL LITERACY QUOTIENT AS PER COMPANIES ACT 2013 MANDATES.
      • BOARD MEMBER SELECTION- A TASK OF PERFECTION
      • SME IPO – AN OPPORTUNITY TO CAPITALIZE YOUR BUSINESS
    • December (3)
      • Good or bad, Salary Increments always cause a heartburn among employees
      • Is Economic Progress Enough?
      • Emotional Intelligence
    • November (3)
      • Generating Wealth Beyond Money
      • "Agile Mindset for Leadership"
      • Tips for Aspiring Independent Directors
    • September (3)
      • Independent Director
      • Lean Thinking Boards
      • Corporate Governance & Women on Boards
  • 2022
    • August (1)
      • Liability of Independent Directors – An Important Aspect of Corporate Governance
    • February (4)
      • A Hero's Farewell: How to handle employee exits with dignity
      • Green Bonds: An Instrument for Financing a Sustainable Future
      • Tool for effectiveness of Board Committees - Ask Right Questions
      • Russia-Ukraine war and India’s Business Implication
    • July (2)
      • Stagnation or Evolution – Mindset Shifts of Boards when Company sees Stagnated Growth
      • Risk Assessment and Minimization Procedures – Role of Board
    • March (2)
      • A study on Sustainability Report of Container Shipping Companies.
      • India and The ESG impact of Crypto Currencies
    • May (1)
      • Independent Directors liability under GST
    • November (1)
      • Workplace Sexual Harassment and the Role of Board
    • October (2)
      • How many Boards are too many?
      • Women in Indian Boardrooms Vs Diversity = Inversely Proportionate
    • September (2)
      • Organizing for the Future – Important keys to becoming future ready
      • Are you ready to serve on the Board?