Professional Documents
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CORPORATE GOVERNANCE
Comparison between the provisions of Old Clause 49 of the Listing Agreement and the
provisions of the said Clause after considering the amendments which are effective
from 01.10.2014 and Circular dated 15th September, 2014 issued by SEBI
Sl. No.
Applicability
of Clause 49
Old Clause 49
No such provision
1.
2.
No such provision
No such provision
4.
5.
No such provision
No such provision
S.No
Old Clause 49
6.
Disclosure of Information
i) Members of the Board and key executives
should disclose to the board whether they,
directly, indirectly or on behalf of third parties,
have a material interest in any transaction or
matter directly affecting the company.
ii) The Board and top management should meet
the expectations of operational transparency to
stakeholders while at the same time maintaining
confidentiality of information.
No such provision
7.
No such provision
S.No
8.
Old Clause 49
No such provision
S.No
1.
2.
B. Independent Directors
3.
Definition: As compared to Section 149 of the Companies Act, 2013 (Attached as per
Annexure I)
4.
No such provision.
No such provision
S.No
5.
i)
Old Clause 49
6.
7.
No such provision
No such provision
8.
No such provision
No such provision
11.
12.
13.
Same
14.
Same
15.
* It applies to the Committees of only public limited companies whether listed or not.
* For the purpose of reckoning the aforesaid limit only Audit Committee and Shareholders
Grievance Committee shall be considered.
16.
17.
Same
18.
19.
20.
21.
22.
F. Code of Conduct
The Board shall lay down a code of conduct
for
all
Board
members
and
senior
management of the company
This Code of Conduct shall be posted on the
website of the Company
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.
The Code of Conduct shall suitably incorporate
the duties of Independent Directors as laid
down in
the Companies Act, 2013.
An independent director shall be held liable,
only in respect of such acts of omission or
commission by a company which had
occurred with his knowledge, attributable
through Board processes, and with his
consent or connivance or where he had not
acted diligently with respect of the provisions
contained in the Listing Agreement.
Same
Same
Same
No such provision
No such provision
3.
Same
Same
Same
4.
5.
6.
Same
Same
Same
9.
10.
Same
Same
Same
Same
directors
Same
No such Provision
No such Provision
No such provision
12.
13.
Same
S.No
14.
15.
16.
B. Other provisions
2.
Same
4.
Same
5.
Same
3.
Same
S.No
6.
V. Risk Management
1
i)
ii)
iii)
No such provision
VI. Disclosures
A. Related Party Transactions
1.
No such provision
No such provision
4.
5.
6.
No such provision
Same
7.
8.
Same
Same
Same
9.
10.
E. Management
Management Discussion & Analysis Report should
form part of the Annual Report of the Company
Senior Management* to disclose to the Board:
all
material
financial
&
commercial
transactions
where they have personal interests
that may have potential conflict with the
interest of the company
Same
Same
* Senior management shall exclude the Board of Directors but includes the personnel of the
company who are members of its core management team and all members of management one
level below the executive directors including all functional heads.
F. Shareholders
11.
12.
13.
14.
1.
Same
Same
Same
2.
3.
1.
2.
Same
Same
Same
Same
Annexure - I
Comparison of Definitions of Independent Directors under Clause 49 of Listing
Agreement and Section 149 of Companies Act 2013 and
new Clause 49 of Listing
Agreement
SNO
SECTION 149 OF
COMPANIES
ACT
2013
An
independent
director in relation to
a company means a
director other than a
managing director or a
whole-time director or
a nominee director.
S
N
O
1
Old
CLAUSE
49
OF
LISTING AGREEMENT
No such provision.
No such provision.
This
concept
of
number
of
Independent
Directors, linking with
Chairman,
not
present.
Although, in terms of
Section 149(4) of the
Companies
Act,
2013{Act}
every
listed public company
shall
have
atleast
one-third of the total
number of Directors
as
Independent
Directors
on
the
Board (fractions to be
rounded off as 1).
Following classes of
Companies,
shall
have
atleast
two
Independent Directors
{ in terms of the rules
An independent director
shall mean a non-executive
director of the company.
For
the
NEW CLAUSE 49 OF
LISTING AGREEMENT
WEF 1-10-2014
Independent director shall
mean
a non-executive director,
other than a nominee
director of the company:
directors.
Explanation:
For
the
purpose
of
the
expression
related
to
any promoter
referred to in sub-clause
(2):
i. If the promoter is a
listed entity, its directors
other
than
the
independent directors, its
employees or its nominees
shall be deemed to be
related to it;
ii. If the promoter is
an unlisted entity, its
directors, its employees
or its nominees shall be
deemed to be related to
it.
He is not related to
promoters
or
persons
occupying
management
positions at the board level
or at one level below the
board;
Apart
from
receiving
directors
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
Apart
from
receiving
director's
remuneration,
has or had no Material
pecuniary relationship with
the company, its holding,
subsidiary
or
associate
company,
or
their
promoters, or directors,
during
the
two
immediately
preceding
financial years or during the
current financial year;
None
of
whose
relatives has or had
pecuniary relationship
or transaction with the
company, its holding,
subsidiary or associate
company,
or
their
No such provision.
promoters,
or
directors, amounting
to two per cent. or
more of its gross
turnover
or
total
income or fifty lakh
rupees or such higher
amount as may be
prescribed, whichever
is lower, during the
two
immediately
preceding
financial
years or during the
current financial year;
Who, neither himself
nor any of his relatives
holds or has held the
position of a key
managerial personnel
or is or has been
employee
of
the
company
or
its
holding, subsidiary or
associate company in
any
of
the
three
financial
years
immediately preceding
the financial year in
which he is proposed
to be appointed.
directors, amounting to
two per cent. or more of
its gross turnover or total
income or fifty lakh rupees
or such higher amount as
may
be
prescribed,
whichever
is
lower,
during
the
two
immediately
preceding
financial years or during
the current financial year;
SNO
SECTION 149 OF
COMPANIES
ACT
2013
SN
O
Old CLAUSE 49 OF
LISTING AGREEMENT
NEW CLAUSE 49 OF
LISTING AGREEMENT
WEF 1-10-2014
10
He is not a partner or an
executive or was not
partner or an executive
during the preceding three
years, of any of the
following:
11
12
13
He is not a material
supplier, service provider
or customer or a lessor or
lessee of the company,
which
may
affect
independence
of
the
director;
12
He is not a substantial
shareholder
of
the
company i.e. owning two
percent or more of the
block of voting shares.
13
SN
O
14
SECTION
149
OF
COMPANIES
ACT
2013
No such provision.
SN
O
14
Old
CLAUSE
49
OF
LISTING AGREEMENT
NEW CLAUSE 49 OF
LISTING AGREEMENT
WEF 1-10-2014
Explanation
Explanation
a. Associate shall mean ai.
i. Associate" shall
company which is an
mean
a
company
associate as defined in
which
is
an
Accounting
Standard
associate as defined
(AS) 23, Accounting for
in
Accounting
Investments
in
Standard (AS) 23,
Associates
in
Accounting
for
Consolidated
Financial
Investments
in
Statements, issued by
Associates
in
the
Institute
of
Consolidated
Chartered
Accountants
Financial
of India.
Statements,
issued
by the Institute of
Chartered
b. Senior management
Accountants of India.
shall mean personnel
of the company who
are members of its
ii.
Key Managerial
core
management
Personnel" shall mean
team excluding Board
Key
Managerial
of Directors. Normally,
Personnel as defined in
this would comprise all
section 2(51) of the
members
of
Companies Act, 2013.
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.
d. Nominee
directors
iii.
Relative shall
appointed
by
an
mean
relative
as
institution which has
defined in section 2(77)
invested in or lent to
of the Companies Act,
the company shall be
2013
and
rules
deemed
to
be
prescribed there under.
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].
SN
O
15
16
SECTION
149
OF
COMPANIES
ACT
2013
Who, neither himself
nor any of his relatives
is a Chief Executive or
director, by whatever
name called, of any
non-profit organisation
that receives twentyfive per cent. or more of
its receipts from the
company, any of its
promoters, directors or
its holding, subsidiary or
associate company or
that holds two per cent.
or more of the total
voting power of the
company; or
SN
O
Old
CLAUSE
49
OF
LISTING AGREEMENT
15
No such provision.
16
No such provision.
NEW CLAUSE 49 OF
LISTING AGREEMENT
WEF 1-10-2014
Who, neither himself nor
any of his relatives is a
Chief
Executive
or
director, by whatever
name called, of any nonprofit organisation that
receives twenty-five per
cent or more of its
receipts
from
the
company, any of its
promoters, directors or
its holding, subsidiary or
associate company or
that holds two per cent
or more of the total
voting power of the
company;
No such provision
Annexure-II
CORPORATE GOVERNANCE
(Compliance report in respect of the minimum information to be placed before the Board
in terms of Clause 49 of the Listing Agreement)
Sl.
No.
1
2
3
4
5
6
7
8
10
11
12
13
14
15
New Clause 49
Old Clause 49
Applicable from 1/10/2014
Information to be placed before the Board
Annual operating plans and budgets and any updates.
Same
Capital budgets and any updates.
Same
Quarterly results for the Company and its operating
Same
divisions or business segments.
Minutes of meetings of Audit Committee and other
Same
Committees of the Board.
The information on recruitment and remuneration of
Same
senior officers just below the board level, including
appointment or removal of Chief Financial Officer and
the Company Secretary.
Show cause, demand, prosecution notices and penalty
Same
notices, which are materially important.
Fatal or serious accidents, dangerous occurrences, any
Same
material effluent or pollution problems.
Any material default in financial obligations to and by
Same
the company, or substantial nonpayment for goods
sold by the company.
Any issue, which involves possible public or product
Same
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.
Details of any joint venture or collaboration agreement.
Same
Transactions that involve substantial payment towards
Same
goodwill, brand equity, or intellectual property.
Significant labour problems and their proposed
Same
solutions. Any significant development in Human
Resources/ Industrial Relations front like signing of
wage
agreement,
implementation
of
Voluntary
Retirement Scheme etc.
Sale of material nature, of investments, subsidiaries,
Same
assets, which is not in normal course of business.
Quarterly details of foreign exchange exposures and
Same
the steps taken by management to limit the risks of
adverse exchange rate movement, if material.
Non-compliance of any regulatory, statutory or listing
Same
requirements and shareholders service such as nonpayment of dividend, delay in share transfer etc.
Annexure-III
SUGGESTED LIST OF ITEMS TO BE INCLUDED IN THE REPORT ON CORPORATE
GOVERNANCE IN THE ANNUAL REPORT OF COMPANIES
Sl.
No.
1
2
New Clause 49
Applicable from 1/10/2014
A brief statement on companys philosophy on
code of governance.
Board of Directors:
a. Composition and category of directors, for
example, promoter, executive,
nonexecutive,
independent
non-executive,
nominee
director,
which
institution
represented as lender or as equity investor.
b. Attendance of each director at the Board
meetings and the last AGM.
c. Number of other Boards or Board
Committees in which he/she is a member or
Chairperson.
d. Number of Board meetings held, dates on
which held.
Audit Committee:
a. Brief description of terms of reference
b. Composition, name of members and
Chairperson
c. Meetings and attendance during the year
Nomination and Remuneration Committee:
a. Brief description of terms of reference
b. Composition, name of members and
Chairperson
c. Attendance during the year
d. Remuneration policy
e. Details of remuneration to all the directors,
as per format in main report.
Old Clause 49
No Change
No Change
No Change
Remuneration Committee:
a. Brief
description
of
terms
of
reference
b. Composition, name of members and
Chairperson
c. Attendance during the year
d. Remuneration policy
e. Details of remuneration to all the
directors, as per format in main
report.
Shareholders Committee:
a. Name of non-executive director
heading the committee
b. Name
and
designation
of
compliance officer
c. Number
of
shareholders
complaints received so far
d. Number
not
solved
to
the
satisfaction of shareholders
e. Number of pending complaints
No change
Sl.
No.
7
Old Clause 49
Disclosures:
a. Disclosures
on
materially
significant
related party transactions that may have
potential conflict with the interests of
company at large.
b. 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.
c. Whistle Blower policy and affirmation that
no personnel has been denied access to
the audit committee.
d. Details of compliance with mandatory
requirements and adoption of the nonmandatory requirements of this clause
Means of communication:
a. Quarterly results
b. Newspapers wherein results normally
published
c. Any website, where displayed
d. Whether it also displays official news
releases; and
e. The presentations made to institutional
investors or to the
General Shareholder information:
a. AGM: Date, time and venue
b. Financial year
c. Date of Book closure
d. Dividend Payment Date
e. Listing on Stock Exchanges
f. Stock Code
g. Market Price Data: High., Low during each
month in last financial year
h. Performance in comparison to broadbased indices such as BSE Sensex, CRISIL
index etc.
i. Registrar and Transfer Agents
j. Share Transfer System
k. Distribution of shareholding
l. Dematerialization of shares and liquidity
m. Outstanding GDRs/ADRs/Warrants or any
Convertible instruments, conversion date
and likely impact on equity
n. Plant Locations
o. Address for correspondence
No Change
No Change
No Change
Sl.
No.
1
NON-MANDATORY REQUIREMENTS
New Clause 49
Old Clause 49
Applicable from 1/10/2014
The Board
The Board
The Board - A non-executive Chairman may A non-executive Chairman may be entitled
be entitled to maintain a Chairman's office to maintain a Chairmans office at the
at the company's expense and also allowed companys expense and also allowed
reimbursement of expenses incurred in reimbursement of expenses incurred in
performance of his duties.
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.
The company may ensure that the person
who is being appointed as an independent
director has the requisite qualifications
and experience which would be of use to
the company and which, in the opinion of
the company, would enable him to
contribute effectively to the company in
his capacity as an independent director.
No such provision
Remuneration Committee
i.
ii.
iii.
iv.
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.
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
companys
policy
on
specific
remuneration
packages
for
executive
directors
including
pension
rights
and
any
compensation payment.
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.
All
the
members
of
the
remuneration committee could be
present at the meeting.
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.
No Change
Sl.
No.
5
Audit qualifications
Company may move towards a regime of
unqualified financial statements.
New Clause 49
Applicable from 1/10/2014
No such provision
No such provision
No such provision
10
No Change
Old Clause 49
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.
Mechanism for evaluating nonexecutive Board Members
The performance evaluation of nonexecutive 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.
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 companys 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.
No such provision
No such provision
No Change
Sl.
No.
11
12
New Clause 49
Applicable from 1/10/2014
Corporate Filing and Dissemination
System
(CFDS),
viz.,
www.corpfiling.co.in
(1) The company agrees (a) to file on the CDFS, such information,
statements and reports as may be specified
by the Participating Stock Exchanges in this
regard.
(b) that the Compliance Officer, appointed
under clause 47(a) and the company shall
be responsible for ensuring the correctness,
authenticity and comprehensiveness of the
information, statements and reports filed
under this clause and also for ensuring that
such information is in conformity with the
applicable laws and the listing agreement.
(c) to ensure that the electronic filing of
information through CFDS, pursuant to
compliance with any clause of the listing
agreement, shall be done within the time
limit specified in the respective clause of the
listing agreement.
(d) to put in place such infrastructure as
may be required to comply with the clause.
Explanation: For the purposes of this clause
Old Clause 49
No Change
No Change
Sl.
No.
13
14
New Clause 49
Applicable from 1/10/2014
The issuer company agrees to maintain a
functional
website
containing
basic
information about the company e.g. details
of its business, financial information,
shareholding pattern,
compliance with
corporate governance, contact information
of the designated officials of the company
who are responsible for assisting and
handling investor grievances, details of
agreements entered into with the media
companies and/or their associates, etc. The
company also agrees to ensure that the
contents of the said website are updated at
any given point of time.
Listed entities shall submit, as part of their
Annual Reports, Business Responsibility
Reports, describing the initiatives taken by
them from an environmental, social and
governance perspective, in the format
suggested as under.
Old Clause 49
No Change
No Change