With the rising influence of the BRIC countries on global business and boards, I thought it would be useful to share a few corporate governance do’s and don’ts that may astound, amuse, puzzle or enlighten:
Brazil
- The agents of governance should be accountable for their actions, undertaking the full consequences of their acts and omissions.
- The board of directors must ensure that management preemptively identifies and lists the main risks to which the organization is exposed. Management should also calculate the odds of such risks actually occurring.
- While it is recommended that the CEO should not be a member of the board, the CEO should attend the board meetings as a guest.
China
- The board of directors shall at least convene two meetings every year.
- Those who are not permitted to serve on the board include any person who holds a position in the company, such person’s lineal relatives and major social relations.
- In case the independent directors fail to perform their duties, they shall bear the relevant responsibilities.
India
- To prevent unfettered decision-making power with a single individual, the roles and offices of chairman and CEO should be separated, as far as possible, to promote balance of power.
- An individual may not remain as an independent board director in a company for more than six years.
- The maximum number of public companies in which an individual may serve as an independent director should be restricted to seven.
Russia
- Companies should not, as a rule, take part in operations and conclude transactions involving a high risk of losing capital and investments.
- The law restricts the participation of the director general or members of the managerial board of the company on the board of directors. However, it fails to provide the procedures needed to enforce this restriction.
- The company should actively exercise its right to claim damages from members of the board of directors to compensate losses suffered.