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SEBI
has considered the recommendations of the NR Narayana
Murthy Committee and has amended Clause-49 of the Listing
Agreement wide its notification of October 29, 2004. The
implementation schedule entails immediate compliance for
those seeking listing for the first time, compliance by
April 1, 2005 for those with a paid up share capital of
3 crores and above or net worth of 25 crores and above;
and March 31, 2005 for the others already complying with
the current clause. Several new initiatives are evident
which include limitation on directorship/chairmanship;
better elucidation of the qualifications and independence
of audit committees as well as its powers, role, etc;
straightening up the relationship with the subsidiary
company boards; improving the disclosure systems CEO/CFO
certification, etc., a format for quarterly compliance
report has been provided as an annexure. Importantly,
there are several non-mandatory requirements amongst which,
the notable once are in respect of training of Board members,
mechanism for evaluating non-executive board members and
a whistle blower policy. The text of the circular along
with annexures are as follows:
==================================================================================
Parag
Basu
Deputy General Manager
Corporation Finance Department
Division of Issues and Listing-II
Phone: +91 22 2285 0451-56, (Extn: 410) 22871582
Fax: +91 22 2204 5633. Email: paragb@sebi.gov.in
SEBI/CFD/DIL/CG/1/2004/12/10
October 29, 2004
The
Managing Director/Executive Director/Administrator
of all the Stock Exchanges
Dear Sir/Madam,
Sub: Corporate Governance in listed Companies
– Clause 49 of the Listing Agreement
1.
All Stock Exchanges are hereby directed to amend the Listing
Agreement by replacing the existing Clause 49 of the listing
agreement (issued vide circulars dated 21 st February,
2000, 9 th March 2000, 12 th September 2000, 22 nd January,2001,
16 th March 2001 and 31 st December 2001) with the revised
Clause 49 given in Annexure I through I D to this circular.
SEBI Circular no. SEBI/MRD/SE/31/2003/26/08 dated August
26, 2003 (which has been since deferred) is hereby withdrawn.
The revised Clause 49 also specifies the reporting requirements
for a company.
2. Please note that this is a master circular which supersedes
all other earlier circulars issued by SEBI on Clause 49
of the Listing Agreement.
3. The provisions of the revised Clause 49 shall be implemented
as per the schedule of implementation given below:
a) For entities seeking listing for the first time, at
the time of seeking in-principle approval for such listing.
b) For existing listed entities which were required to
comply with Clause 49 which is being revised i.e. those
having a paid up share capital of Rs. 3 crores and above
or net worth of Rs. 25 crores or more at any time in the
history of the company, by April 1, 2005. Companies complying
with the provisions of the existing Clause 49 at present
(issued vide circulars dated 21 st February, 2000, 9 th
March 2000, 12 th September 2000, 22 nd January, 2001
16 th March 2001 and 31 st December 2001) shall continue
to do so till the revised Clause 49 of the Listing Agreement
is complied with or till March 31, 2005,
whichever is earlier.
4. The companies which are required to comply with the
requirements of the revised Clause 49 shall submit a quarterly
compliance report to the stock exchanges as per sub Clause
VI (ii), of the revised Clause 49, within 15 days from
the end of every quarter. The first such report would
be submitted for the quarter ending June 30, 2005. The
report shall be signed either by the Compliance Officer
or the Chief Executive Officer of the company.
5. The revised Clause 49 shall apply to
all the listed companies, in accordance with the schedule
of implementation given above. However, for other listed
entities which are not companies, but body corporate (e.g.
private and public sector banks, financial institutions,
insurance companies etc.) incorporated under other statutes,
the revised Clause 49 will apply to the extent that it
does not violate their respective statutes and guidelines
or directives issued by the relevant regulatory authorities.
The revised Clause 49 is not
applicable to Mutual Funds.
6. The Stock Exchanges shall ensure that all provisions
of the revised Clause 49 have been complied with by a
company seeking listing for the first time, before granting
the in-principle approval for such listing. For this purpose,
it will be considered satisfactory compliance if such
a company has set up its Board and constituted committees
such as Audit Committee, Shareholders/ Investors Grievances
Committee etc. in accordance with the revised clause before
seeking in-principle approval for listing.
7. The Stock Exchanges shall set up a separate monitoring
cell with identified personnel to monitor the compliance
with the provisions of the revised Clause 49 on corporate
governance. The cell, after receiving the quarterly compliance
reports from the companies which are required to comply
with the requirements of the revised Clause 49, shall
submit a consolidated compliance report to SEBI within
60 days from the end of each quarter.
Yours faithfully,
Parag Basu
Encl: Annexure I, I A, I B, I C & I D
Annexure I
Clause 49 - Corporate Governance
The company agrees to comply with the following provisions:
I.
Board of Directors
(A) Composition of Board
(i) The Board of directors of the company shall have an
optimum combination of executive and non-executive directors
with not less than fifty percent of the board of directors
comprising of non-executive directors.
(ii) Where the Chairman of the Board is a non-executive
director, at least one-third of the Board should comprise
of independent directors and in case he is an executive
director, at least half of the Board should comprise of
independent directors.
(iii) For the purpose of the sub-clause (ii), the expression
‘independent director’ shall mean a non-executive director
of thecompany who:
a. apart from receiving director’s remuneration, does
not have any material pecuniary relationships or transactions
with the company, its promoters, its directors, its
senior management or its holding company, its subsidiaries
and associates which may affect independence of the
director;
b. is not related to promoters or persons occupying
management positions at the board level or at one level
below the board;
c. has not been an executive of the company in the immediately
preceding three financial years;
d. is not a partner or an executive or was not partner
or an executive during the preceding three years, of
any of the following:
i)
the statutory audit firm or the internal audit firm
that is associated with the company, and
ii) the legal firm(s) and consulting firm(s) that
have a material association with the company.
e. is not a material supplier, service provider or customer
or a lessor or lessee of the company, which may affect
independence of the director; and
f. is not a substantial shareholder of the company i.e.
owning two percent or more of the block of voting shares.
Explanation For the purposes of the sub-clause
(iii):
a. Associate shall mean a company which is an “associate”
as defined in Accounting Standard (AS) 23, “Accounting
for Investments in Associates in Consolidated Financial
Statements”, issued by the Institute of Chartered Accountants
of India.
b. “Senior management” shall mean personnel of the company
who are members of its core management team excluding
Board of Directors. Normally, this would comprise all
members of management one level below the executive
directors, including all functional heads.
c.
“Relative” shall mean “relative” as defined in section
2(41) and section 6 read with Schedule IA of the Companies
Act, 1956..
(iv) Nominee directors appointed by an institution which
has invested in or lent to the company shall be deemed
to be independent directors.
Explanation:
“Institution’ for this purpose means a public financial
institution as defined in Section 4A of the Companies
Act, 1956 or a “corresponding new bank” as defined in
section 2(d) of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 or the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980
[both Acts].”
(B)
Non executive directors’ compensation and disclosures
All fees/compensation, if any paid to non-executive directors,
including independent directors, shall be fixed by the
Board of Directors and shall require previous approval
of shareholders in general meeting. The shareholders’
resolution shall specify the limits for the maximum number
of stock options that can be granted to non-executive
directors, including independent directors, in any financial
year and in aggregate.
(C) Other provisions as to Board and Committees
(i) The board shall meet at least four times a year, with
a maximum time gap of three months between any two meetings.
The minimum information to be made available to the board
is given in Annexure– I A.
(ii) A director shall not be a member in more than 10
committees or act as Chairman of more than five committees
across all companies in which he is a director. Furthermore
it should be a mandatory annual requirement for every
director to inform the company about the committee positions
he occupies in other companies and notify changes as and
when they take place.
Explanation:
1. For the purpose of considering the limit of the committees
on which a director can serve, all public limited companies,
whether listed or not, shall be included and all other
companies including private limited companies, foreign
companies and companies under Section 25 of the Companies
Act shall be excluded.
2. For the purpose of reckoning the limit under this sub-clause,
Chairmanship/membership of the Audit Committee and the
Shareholders’ Grievance Committee alone shall be considered.
(iii) The Board shall periodically review compliance reports
of all laws applicable to the company, prepared by the
company as well as steps taken by the company to rectify
instances of non-compliances.
(D) Code of Conduct
(i) The Board shall lay down a code of conduct for all
Board members and senior management of the company. The
code of conduct shall be posted on the website of the
company.
(ii) All Board members and senior management personnel
shall affirm compliance with the code on an annual basis.
The Annual Report of the company shall contain a declaration
to this effect signed by the CEO.
Explanation: For this purpose, the term
“senior management” shall mean personnel of the company
who are members of its core management team excluding
Board of Directors.. Normally, this would comprise all
members of management one level below
the executive directors, including all functional heads.
II Audit Committee
(A) Qualified and Independent Audit Committee
A qualified and independent audit committee shall be set
up, giving the terms of reference subject to the following:
(i) The audit committee shall have minimum three directors
as members. Two-thirds of the members of audit committee
shall be independent directors.
(ii) All members of audit committee shall be financially
literate and at least one member shall have accounting
or related financial management expertise.
Explanation 1: The term “financially
literate” means the ability to read and understand basic
financial statements i.e. balance sheet, profit and loss
account, and statement of cash flows.
Explanation 2: A member will be considered
to have accounting or related financial management expertise
if he or she possesses experience in finance or accounting,
or requisite professional certification in accounting,
or any other comparable experience or
background which results in the individual’s financial
sophistication, including being or having been a chief
executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
(iii) The Chairman of the Audit Committee shall be an
independent director;
(iv) The Chairman of the Audit Committee shall be present
at Annual General Meeting to answer shareholder queries;
(v) The audit committee may invite such of the executives,
as it considers appropriate (and particularly the head
of the finance function) to be present at the meetings
of the committee, but on occasions it may also meet without
the presence of any executives of the company. The finance
director, head of internal audit and a representative
of the statutory auditor may be present as invitees for
the meetings of the audit committee;
(vi) The Company Secretary shall act as the secretary
to the committee.
(B)
Meeting of Audit Committee
The audit committee should meet at least four times in
a year and not more than four months shall elapse between
two meetings. The quorum shall be either two members or
one third of the members of the audit committee whichever
is greater, but there should be a minimum of two independent
members present.
(C) Powers of Audit Committee
The audit committee shall have powers, which should include
the following:
1. To investigate any activity within its terms of reference.
2. To seek information from any employee.
3. To obtain outside legal or other professional advice.
4. To secure attendance of outsiders with relevant expertise,
if it considers necessary.
(D) Role of Audit Committee
The role of the audit committee shall include the following:
1. Oversight of the company’s financial reporting process
and the disclosure of its financial information to ensure
that the financial statement is correct, sufficient and
credible.
2. Recommending to the Board, the appointment, re-appointment
and, if required, the replacement or removal of the statutory
auditor and the fixation of audit fees.
3. Approval of payment to statutory auditors for any other
services rendered by the statutory auditors.
4. Reviewing, with the management, the annual financial
statements before submission to the board for approval,
with particular reference to:
a. Matters required to be included in the Director’s Responsibility
Statement to be included in the Board’s report in terms
of clause (2AA) of section 217 of the Companies Act, 1956
b. Changes, if any, in accounting policies and practices
and reasons for the same
c. Major accounting entries involving estimates based
on the exercise of judgment by management
d. Significant adjustments made in the financial statements
arising out of audit findings
e. Compliance with listing and other legal requirements
relating to financial statements
f. Disclosure of any related party transactions
g. Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial
statements before submission to the board for approval
6. Reviewing, with the management, performance of statutory
and internal auditors, adequacy of the internal control
systems.
7. Reviewing the adequacy of internal audit function,
if any, including the structure of the internal audit
department, staffing and seniority of the official heading
the department, reporting structure coverage and frequency
of internal audit.
8. Discussion with internal auditors any significant findings
and follow up there on.
9. Reviewing the findings of any internal investigations
by the internal auditors into matters where there is suspected
fraud or irregularity or a failure of internal control
systems of a material nature and reporting the matter
to the board.
10. Discussion with statutory auditors before the audit
commences, about the nature and scope of audit as well
as post-audit discussion to ascertain any area of concern.
11. To look into the reasons for substantial defaults
in the payment to the depositors, debenture holders, shareholders
(in case of non payment of declared dividends) and creditors.
12. To review the functioning of the Whistle Blower mechanism,
in case the same is existing.
13. Carrying out any other function as is mentioned in
the terms of reference of the Audit Committee.
Explanation (i): The term "related
party transactions" shall have the same meaning as
contained in the Accounting Standard 18, Related Party
Transactions, issued by The Institute of Chartered Accountants
of India.
Explanation (ii): If the company has
set up an audit committee pursuant to provision of the
Companies Act, the said audit committee shall have such
additional functions/features as is contained in this
clause.
(E) Review of information by Audit Committee
The Audit Committee shall mandatorily review the following
information:
1. Management discussion and analysis of financial condition
and results of operations;
2. Statement of significant related party transactions
(as defined by the audit committee), submitted by management;
3. Management letters / letters of internal control weaknesses
issued by the statutory auditors;
4. Internal audit reports relating to internal control
weaknesses; and
5. The appointment, removal and terms of remuneration
of the Chief internal auditor shall be subject to review
by the Audit Committee
III. Subsidiary Companies
i. At least one independent director on the Board of Directors
of the holding company shall be a director on the Board
of Directors of a material non listed Indian subsidiary
company.
ii. The Audit Committee of the listed holding company
shall also review the financial statements, in particular,
the investments made by the unlisted subsidiary company.
iii. The minutes of the Board meetings of the unlisted
subsidiary company shall be placed at the Board meeting
of the listed holding company. The management should periodically
bring to the attention of the Board of Directors of the
listed holding company, a statement of all significant
transactions and arrangements entered into by the unlisted
subsidiary company.
Explanation 1: The term “material non-listed
Indian subsidiary” shall mean an unlisted subsidiary,
incorporated in India, whose turnover or net worth (i.e.
paid up capital and free reserves) exceeds 20% of the
consolidated turnover or net worth respectively, of the
listed
holding company and its subsidiaries in the immediately
preceding accounting year.
Explanation 2: The term “significant transaction or arrangement”
shall mean any individual transaction or arrangement that
exceeds or is likely to exceed 10% of the total revenues
or total expenses or total assets or total liabilities,
as the case may be, of the material unlisted subsidiary
for the immediately preceding accounting year.
Explanation 3: Where a listed holding company has a listed
subsidiary which is itself a holding company, the above
provisions shall apply to the listed subsidiary insofar
as its subsidiaries are concerned.
IV. Disclosures
(A) Basis of related party transactions
(i) A statement in summary form of transactions with related
parties in the ordinary course of business shall be placed
periodically before the audit committee.
(ii) Details of m aterial individual transactions with
related parties which are not in the normal course of
business shall be placed before the audit committee.
(iii) Details of material individual transactions with
related parties or others, which are not on an arm’s length
basis should be placed before the audit committee, together
with Management’s justification for the same..
(B) Disclosure of Accounting Treatment
Where in the preparation of financial statements, a treatment
different from that prescribed in an Accounting Standard
has been followed, the fact shall be disclosed in the
financial statements, together with the management’s explanation
as to why it believes such alternative treatment is more
representative of the true and fair view of the underlying
business transaction in the Corporate Governance Report.
(C) Board Disclosures – Risk management
The company shall lay down procedures to inform Board
members about the risk assessment and minimization procedures.
These procedures shall be periodically reviewed to ensure
that executive management controls risk through means
of a properly
defined framework.
(D) Proceeds from public issues, rights issues,
preferential issues etc.
When money is raised through an issue (public issues,
rights issues, preferential issues etc.), it shall disclose
to the Audit Committee, the uses / applications of funds
by major category (capital expenditure, sales and marketing,
working capital, etc), on a quarterly basis as a part
of their quarterly declaration of financial results. Further,
on an annual basis, the company shall prepare a statement
of funds utilized for purposes other thanthose stated
in the offer document/prospectus/notice and place it before
the audit committee. Such disclosure shall be made only
till such time that the full money raised through the
issue has been fully spent. This statement shall be certified
by the statutory auditors of the company. The audit committee
shall make appropriate recommendations to the Board to
take up steps in this matter.
(E) Remuneration of Directors
(i) All pecuniary relationship or transactions of the
non-executive directors vis-à-vis the company shall
be disclosed in the Annual Report.
(ii) Further the following disclosures on the remuneration
of directors shall be made in the section on the corporate
governance of the Annual Report:
(a) All elements of remuneration package of individual
directors summarized under major groups, such as salary,
benefits, bonuses, stock options, pension etc.
(b) Details of fixed component and performance linked
incentives, along with the performance criteria.
(c) Service contracts, notice period, severance fees.
(d) Stock option details, if any – and whether issued
at a discount as well as the period over which accrued
and over which exercisable.
(iii) The company shall publish its criteria of making
payments to non-executive directors in its annual report.
Alternatively, this may be put up on the company’s website
and reference drawn thereto in the annual report.
(iv) The company shall disclose the number of shares and
convertible instruments held by non-executive directors
in the annual report.
(v) Non-executive directors shall be required to disclose
their shareholding (both own or held by / for other persons
on a beneficial basis) in the listed company in which
they are proposed to be appointed as directors, prior
to their appointment. These details should be disclosed
in the notice to the general meeting called for appointment
of such director
(F) Management
(i) As part of the directors’ report or as an addition
thereto, a Management Discussion and Analysis report should
form part of the Annual Report to the shareholders. This
Management Discussion & Analysis should include discussion
on the following matters within the limits set by the
company’s competitive position:
i. Industry structure and developments.
ii. Opportunities and Threats.
iii. Segment–wise or product-wise performance.
iv. Outlook
v. Risks and concerns.
vi. Internal control systems and their adequacy.
vii. Discussion on financial performance with respect
to operational performance.
viii.
Material developments in Human Resources / Industrial
Relations front, including number of people employed.
(ii) Senior management shall make disclosures to the board
relating to all material financial and commercial transactions,
where they have personal interest, that may have a potential
conflict with the interest of the company at large (for
e.g. dealing in company shares, commercial dealings with
bodies, which have shareholding of management and their
elatives etc.)
Explanation: For this purpose, the term
"senior management" shall mean personnel of
the company who are members of its. core management team
excluding the Board of Directors). This would also include
all members of management one level below the executive
directors including all functional heads.
(G) Shareholders
(i) In case of the appointment of a new director or re-appointment
of a director the shareholders must be provided with the
following information:
(a) A brief resume of the director;
(b) Nature of his expertise in specific functional areas;
(c) Names of companies in which the person also holds
the directorship and the membership
of Committees of the Board; and
(d) Shareholding of non-executive directors as stated
in Clause 49 (IV) (E) (v) above
(ii) Quarterly results and presentations made by the company
to analysts shall be put on company’s web-site, or shall
be sent in such a form so as to enable the stock exchange
on which the company is listed to put it on its own web-site.
(iii) A board committee under the chairmanship of a non-executive
director shall be formed to specifically look into the
redressal of shareholder and investors complaints like
transfer of shares, non-receipt of balance sheet, non-receipt
of declared dividends etc. This Committee shall be designated
as ‘Shareholders/Investors Grievance Committee’.
(iv) To expedite the process of share transfers, the Board
of the company shall delegate the power of share transfer
to an officer or a committee or to the registrar and share
transfer agents. The delegated authority shall attend
to share transfer formalities at least once in a fortnight.
V. CEO/CFO certification
The CEO, i.e. the Managing Director or Manager appointed
in terms of the Companies Act, 1956 and the CFO i.e. the
whole-time Finance Director or any other person heading
the finance function discharging that function shall certify
to the Board that:
(a) They have reviewed financial statements and the cash
flow statement for the year and that to the best of their
knowledge and belief :
(i)
these statements do not contain any materially untrue
statement or omit any material fact or contain statements
that might be misleading;
(ii) these statements together present a true and fair
view of the company’s affairs and are in compliance with
existing accounting standards, applicable laws and regulations.
(b) There are, to the best of their knowledge and belief,
no transactions entered into by the company during the
year which are fraudulent, illegal or violative of the
company’s code of conduct.
(c) They accept responsibility for establishing and maintaining
internal controls and that they have evaluated the effectiveness
of the internal control systems of the company and they
have disclosed to the auditors and the Audit Committee,
deficiencies in the design or operation of internal controls,
if any, of which they are aware and the steps they have
taken or propose to take to rectify these deficiencies.
(d) They have indicated to the auditors and the Audit
committee
(i) significant changes in internal control during the
year;
(ii) significant changes in accounting policies during
the year and that the same have been disclosed in the
notes to the financial statements; and
(iii) instances of significant fraud of which they have
become aware and the involvement therein, if any, of the
management or an employee having a significant role in
the company’s internal control system
VI. Report on Corporate Governance
(i) There shall be a separate section on Corporate Governance
in the Annual Reports of company, with a detailed compliance
report on Corporate Governance. Non-compliance of any
mandatory requirement of this clause with reasons thereof
and the extent to which the non-mandatory requirements
have been adopted should be specifically highlighted.
The suggested list of items to be included in this report
is given in Annexure- I C and list of non-mandatory requirements
is given in Annexure – I D.
(ii) The companies shall submit a quarterly compliance
report to the stock exchanges within 15 days from the
close of quarter as per the format given in Annexure I
B. The report shall be signed either by the Compliance
Officer or the Chief Executive Officer of the company
VII. Compliance
(1) The company shall obtain a certificate from either
the auditors or practicing company secretaries regarding
compliance of conditions of corporate governance as stipulated
in this clause and annex the certificate with the directors’
report, which is sent annually to all the shareholders
of the company. The same certificate shall also be sent
to the Stock Exchanges along with the annual report filed
by the company.
(2) The non-mandatory requirements given in Annexure –
I D may be implemented as per the discretion of the company.
However, the disclosures of the compliance with mandatory
requirements and adoption (and compliance) / non-adoption
of the non-mandatory requirements shall be made in the
section on corporate governance of the Annual Report.
Annexure
I A
Information
to be placed before Board of Directors
1. Annual operating plans and budgets and any updates.
2. Capital budgets and any updates.
3. Quarterly results for the company and its operating
divisions or business segments.
4. Minutes of meetings of audit committee and other committees
of the board.
5. The information on recruitment and remuneration of
senior officers just below the board level, including
appointment or removal of Chief Financial Officer and
the Company Secretary.
6. Show cause, demand, prosecution notices and penalty
notices which are materially important
7. Fatal or serious accidents, dangerous occurrences,
any material effluent or pollution problems.
8. Any material default in financial obligations to and
by the company, or substantial non-payment for goods sold
by the company.
9. Any issue, which involves possible public or product
liability claims of substantial nature, including any
judgement or order which, may have passed strictures on
the conduct of the company or taken an adverse view regarding
another enterprise that can have negative implications
on the company.
10. Details of any joint venture or collaboration agreement.
11. Transactions that involve substantial payment towards
goodwill, brand equity, or intellectual property.
12. Significant labour problems and their proposed solutions.
Any significant development in Human Resources/ Industrial
Relations front like signing of wage agreement, implementation
of Voluntary Retirement Scheme etc.
13. Sale of material nature, of investments, subsidiaries,
assets, which is not in normal course of business.
14. Quarterly details of foreign exchange exposures and
the steps taken by management to limit the risks of adverse
exchange rate movement, if material.
15. Non-compliance of any regulatory, statutory or listing
requirements and shareholders service such as non-payment
of dividend, delay in share transfer etc.
Annexure I B
Format
of Quarterly Compliance Report on Corporate Governance
Name of the Company:
Quarter ending on:
| Particulars |
Clause
of Listing Agreement |
Compliance
Status Yes/No |
Remarks |
| I.
Board of Directors |
49
I |
|
|
| (A)Composition
of Board |
49(IA) |
|
|
| (B)Non-executive
Directors’ compensation & disclosures |
49
(IB) |
|
|
| (C)Other
provisions as to Board and Committees |
49
(IC) |
|
|
| (D)Code
of Conduct |
49
(ID) |
|
|
| II.
Audit Committee |
49
(II) |
|
|
| (A)Qualified
& Independent Audit Committee |
49
(IIA) |
|
|
| (B)Meeting
of Audit Committee |
49
(IIB) |
|
|
| (C)Powers
of Audit Committee |
49
(IIC) |
|
|
| (D)Role
of Audit Committee |
49
II(D) |
|
|
| (E)Review
of Information by Audit Committee |
49
(IIE) |
|
|
| III.
Subsidiary Companies |
49
(III) |
|
|
| IV.
Disclosures |
49
(IV) |
|
|
| (A)Basis
of related party transactions |
49
(IV A) |
|
|
| (B)Board
Disclosures |
49
(IV B) |
|
|
| (C)Proceeds
from public issues, rights issues, preferential issues
etc. |
49
(IV C) |
|
|
| (D)Remuneration
of Directors |
49
(IV D) |
|
|
| (E)Management |
49
(IV E) |
|
|
| (F)Shareholders |
49
(IV F) |
|
|
| V.CEO/CFO
Certification |
49
(V) |
|
|
VI.
Report on Corporate Governance
|
49
(VI) |
|
|
| VII.
Compliance |
49
(VII) |
|
|
Note:
1) The details under each head shall be provided to incorporate
all the information required as per the provisions of
the Clause 49 of the Listing Agreement.
2) In the column No.3, compliance or non-compliance may
be indicated by Yes/No/N.A.. For example, if the Board
has been composed in accordance with the Clause 49 I of
the Listing Agreement, "Yes" may be indicated.
Similarly, in case the company has no related party transactions,
the words “N.A.” may be indicated against 49 (IV A).
3)
In the remarks column, reasons for non-compliance may
be indicated, for example, in case of requirement related
to circulation of information to the shareholders, which
would be done only in the AGM/EGM, it might be indicated
in the "Remarks" column as – “will be complied
with at the AGM”. Similarly, in respect of matters which
can be complied with only where the situation arises,
for example, "Report on Corporate Governance"
is to be a part of Annual Report only, the words "will
be complied in the next Annual Report" may be indicated.
Annexure I C
Suggested
List of Items to Be Included In the Report on Corporate
Governance in the Annual Report of Companies
1. A brief statement on company’s philosophy on code of
governance.
2. Board of Directors:
i. Composition and category of directors, for example,
promoter, executive, non- executive, independent non-executive,
nominee director, which institution represented as lender
or as equity investor.
ii. Attendance of each director at the Board meetings
and the last AGM.
iii. Number of other Boards or Board Committees in which
he/she is a member or Chairperson
iv. Number of Board meetings held, dates on which held.
3. Audit Committee:
i. Brief description of terms of reference
ii. Composition, name of members and Chairperson
iii. Meetings and attendance during the year
4. Remuneration Committee:
i. Brief description of terms of reference
ii. Composition, name of members and Chairperson
iii. Attendance during the year
iv. Remuneration policy
v. Details of remuneration to all the directors, as per
format in main report.
5. Shareholders Committee:
i. Name of non-executive director heading the committee
ii. Name and designation of compliance officer
iii. Number of shareholders’ complaints received so far
iv. Number not solved to the satisfaction of shareholders
v. Number of pending complaints
6. General Body meetings:
i. Location and time, where last three AGMs held.
ii. Whether any special resolutions passed in the previous
3 AGMs
iii. Whether any special resolution passed last year through
postal ballot – details of voting pattern
iv. Person who conducted the postal ballot exercise
v. Whether any special resolution is proposed to be conducted
through postal ballot
vi. Procedure for postal ballot
7. Disclosures:
i. Disclosures on materially significant related party
transactions that may have potential conflict with the
interests of company at large.
ii. Details of non-compliance by the company, penalties,
strictures imposed on the company by Stock Exchange or
SEBI or any statutory authority, on any matter related
to capital markets, during the last three years.
iii. Whistle Blower policy and affirmation that no personnel
has been denied access to the audit committee.
iv. Details of compliance with mandatory requirements
and adoption of the non-mandatory requirements of this
clause
8. Means of communication.
i. Quarterly results
ii. Newspapers wherein results normally published
iii. Any website, where displayed
iv. Whether it also displays official news releases; and
v. The presentations made to institutional investors or
to the analysts.
9. General Shareholder information:
i. AGM : Date, time and venue
ii. Financial year
iii. Date of Book closure
iv. Dividend Payment Date
v. Listing on Stock Exchanges
vi. Stock Code
vii. Market Price Data : High., Low during each month
in last financial year
viii. Performance in comparison to broad-based indices
such as BSE Sensex, CRISIL index etc.
ix. Registrar and Transfer Agents
x. Share Transfer System
xi. Distribution of shareholding
xii. Dematerialization of shares and liquidity
xiii. Outstanding GDRs/ADRs/Warrants or any Convertible
instruments, conversion date and likely impact on equity
xiv. Plant Locations
xv. Address for correspondence
Annexure
I D
Non-Mandatory
Requirements
(1) The Board
A non-executive Chairman may be entitled to maintain a
Chairman’s office at the company’s expense and also allowed
reimbursement of expenses incurred in performance of his
duties.
Independent Directors may have a tenure not exceeding,
in the aggregate, a period of nine years, on the Board
of a company.
(2) Remuneration Committee
i. The board may set up a remuneration committee to determine
on their behalf and on behalf of the shareholders with
agreed terms of reference, the company’s policy on specific
remuneration packages for executive directors including
pension rights
and any compensation payment.
ii. To avoid conflicts of interest, the remuneration committee,
which would determine the remuneration packages of the
executive directors may comprise of at least three directors,
all of whom should be non-executive directors, the Chairman
of committee being an independent director.
iii. All the members of the remuneration committee could
be present at the meeting.
iv. The Chairman of the remuneration committee could be
present at the Annual General Meeting, to answer the shareholder
queries. However, it would be up to the Chairman to decide
who should answer the queries.
(3) Shareholder Rights
A half-yearly declaration of financial performance including
summary of the significant events in last six-months,
may be sent to each household of shareholders.
(4) Audit qualifications
Company may move towards a regime of unqualified financial
statements.
(5) Training of Board Members
A company may train its Board members in the business
model of the company as well as the risk profile of the
business parameters of the company, their responsibilities
as directors, and the best ways to discharge them.
(6) Mechanism for evaluating non-executive Board
Members
The performance evaluation of non-executive directors
could be done by a peer group comprising the entire Board
of Directors, excluding the director being evaluated;
and Peer Group evaluation could be the mechanism to determine
whether to extend /
continue the terms of appointment of non-executive directors.
(7) Whistle Blower Policy
The company may establish a mechanism for employees to
report to the management concerns about unethical behaviour,
actual or suspected fraud or violation of the company’s
code of conduct or ethics policy. This mechanism could
also provide for adequate safeguards against victimization
of employees who avail of the mechanism and also provide
for direct access to the Chairman of the Audit committee
in exceptional cases. Once established, the existence
of the mechanism may be appropriately communicated within
the organization.
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