Corporate Governance Framework Design: The Process, Start to Finish
The mechanics of Corporate Governance Framework Design are what clients ask about once they have decided to proceed. The questions below are the ones raised most often in practice; the full scope of the service is on the Corporate Governance Framework Design page.
How is a governance framework different from what our Company Secretary already does for secretarial compliance?
Secretarial compliance — Board meeting notices, minutes, annual filings, statutory registers — is necessary but procedural. Governance framework design addresses the substance behind those procedures: what should the Board actually be deciding, what should be delegated, how should risk and related-party exposure be identified and escalated, and whether the committee structure reflects real oversight or exists only on paper. PNPC works alongside your Company Secretary — we design the framework; ongoing secretarial compliance keeps it correctly filed and documented.
In practice: We are often engaged after a Company Secretary flags that the company's Board practice does not match what is legally required — a CS can identify the gap through compliance review, but designing the substantive framework to close it is a distinct, complementary engagement.
What is SEBI LODR and when does it start applying to a company?
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 apply once a company's equity shares (or other specified securities) are listed on a recognised stock exchange. From the date of listing, the company must comply with the full LODR framework — Board composition (Regulation 17), Audit Committee (Regulation 18), Nomination & Remuneration Committee (Regulation 19), related-party transaction approval and disclosure (Regulation 23), the annual Corporate Governance Report (Schedule V), and a substantial set of continuous and periodic disclosure obligations to the stock exchanges.
In practice: IPO-bound companies should build LODR-equivalent governance practice well before the intended listing date — not just at the offer-document drafting stage — so the company has a genuine track record to disclose, not a framework assembled in the weeks before filing.
How does PNPC price a governance framework engagement?
PNPC scopes each engagement based on company stage, whether the framework must be SEBI LODR-compliant (listed or IPO-bound) or Companies Act-baseline (private/unlisted public), the number of committees and policies required, and whether historical related-party transactions need to be reviewed and regularised as part of the work. A fixed fee is confirmed in writing after the initial diagnostic — before drafting begins.
In practice: We do not price governance framework design as a template drop-in. Two companies at the same funding stage can require very different scopes depending on how many related entities they transact with and how far their current practice is from where it needs to be — we scope based on the diagnostic findings, not a flat package.
Our family business is bringing in a professional CEO for the first time. How does governance framework design help?
This is one of the most common triggers for engagement. A Board Charter and DoA clarify, in writing, exactly what decisions remain with the founder/promoter Board versus what is delegated to the new CEO and their management team — preventing the common friction of a professional CEO being hired with an implied mandate that the founder then informally overrides. It also typically surfaces related-party arrangements (family members on payroll, shared premises, intercompany loans) that need to be formalised or unwound before an outside CEO takes charge.
In practice: The DoA conversation is often the most sensitive part of this engagement because it requires the founder to explicitly define the boundary of their own authority going forward. We facilitate this as a structured conversation rather than presenting a fait accompli document — it works far better when the founder co-designs the boundary rather than being handed one.
What happens if we ignore governance requirements and just keep filing our statutory returns on time?
You will likely remain in technical compliance for routine filings, but you accumulate governance risk that surfaces at the worst possible moment — during investor due diligence, at the point of a related-party dispute, when a whistleblower complaint has nowhere formal to go, or when SEBI or a stock exchange queries your Corporate Governance Report post-listing. The risk is not usually an immediate penalty; it is a compounding structural weakness that becomes expensive to fix under external pressure or deadline.
In practice: A funding round or acquisition can be delayed when governance gaps are discovered mid-diligence. The cost of fixing governance under deal pressure is always higher — in fees, in negotiating leverage, and in founder stress — than building it proactively.
Does a Nomination and Remuneration Committee (NRC) set our salaries, or does it do something different?
The NRC, under Section 178, is responsible for formulating the criteria for determining qualifications, positive attributes, and independence of directors, recommending a policy on remuneration for directors, KMP, and senior management, and — for listed companies — devising a policy on Board diversity and carrying out performance evaluation. It sets the policy and framework for remuneration decisions; it does not necessarily negotiate every individual employment contract, though for KMP and director remuneration, its recommendation is a required step before Board approval.
In practice: A frequent gap we find: companies that have appointed an NRC on paper to satisfy the statutory requirement, but where director and KMP remuneration decisions are still made informally by the promoter without any documented NRC recommendation. We build the actual workflow so the committee's role is substantive, not nominal.
How often should the Audit Committee meet, and what should it actually review?
Market practice — reinforced by the Secretarial Standards and, for listed companies, SEBI LODR Regulation 18 — is for the Audit Committee to meet at least 4 times a year (aligned with quarterly financial reporting where applicable), with the gap between two meetings not exceeding 120 days. Its remit includes reviewing financial statements before Board approval, overseeing the statutory auditor's independence and scope, reviewing internal financial controls and internal audit findings, examining related-party transactions, and reviewing whistleblower complaints referred to it.
In practice: An Audit Committee can meet the statutory minimum frequency yet spend the meeting only rubber-stamping financials without reviewing internal controls findings or RPTs in any depth. We build a standard agenda template that ensures the committee's full statutory remit is actually covered each cycle, not just the financial statement sign-off.
How does a governance framework interact with our existing Shareholders' Agreement (SHA)?
The SHA is a private contract between specific shareholders that often includes investor rights — Board seats, veto rights on specified matters, information rights — that must be reflected in the Board Charter's reserved matters list and, where relevant, the Articles of Association. A governance framework that contradicts SHA-agreed rights creates both a breach-of-contract risk with investors and internal confusion about which document governs. We reconcile the two explicitly as part of framework design.
In practice: Governance documents can end up drafted without reference to an existing SHA, for example when they are prepared by different advisors at different times. Reconciling the two is one of the first things we check in the diagnostic phase.
How does PNPC handle governance framework design for a company with operations in both India and the UAE?
PNPC's Chennai, Bangalore, Hyderabad, and Dubai offices coordinate on cross-border governance design. The Indian entity's framework is built against the Companies Act 2013 and, if applicable, SEBI LODR. The UAE entity's governance is separately assessed against the relevant Free Zone authority or Mainland Commercial Companies Law requirements. Where the two entities have common directors, shared services, or intercompany transactions, we build a consistent related-party transaction and conflict-of-interest framework across both, coordinated from a single engagement rather than two disconnected advisors.
In practice: Cross-border related-party transactions between an Indian entity and its UAE counterpart carry both FEMA and UAE Corporate Tax transfer-pricing implications — governance framework design for these groups has to be done jointly with our cross-border tax team, not as two separate exercises that later need reconciling.
Where this sits in the wider engagement
Corporate Governance Framework Design rarely arrives on its own. The statutory basis and the current requirements are set out on the Corporate Governance Framework Design service page, and the related services are grouped under Corporate Law.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Corporate Governance Framework Design we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.