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Companies need to have a majority of independent The Board of a company needs to have an optimum
directors. [NYSE Corporate Governance Standard combination of executive and non-executive directors
303A.01] with not less than 50% of the directors being non-
executive directors.

If the chairman of the board of directors is a non-

executive director of the company, at least one-third of
the directors should be independent. If the chairman is
an executive director, at least half of the board of
directors of the company should be comprised of
independent directors.

The interpretation of the term µindependent director¶ is

different from the way it is interpreted under NYSE
Corporate Governance Standards.

Certain heightened standards apply to µindependent¶

directors. [NYSE Corporate Governance Standard
303A.02]


 


 

Non-management directors need to meet at regularly There is no requirement for such sessions.
scheduled executive sessions without management
[NYSE Corporate Governance Standard 303A.03]
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In addition to an audit committee, a listed company
needs to have a nominating/corporate governance
committee composed entirely of independent directors.
[NYSE Corporate Governance Standard 303A.04]
The nominating / corporate governance committee
needs to have a written charter that addresses certain
specific committee purposes and responsibilities and
provides for an annual performance evaluation of the
committee. [NYSE Corporate Governance Standard
303A.04]

 

Companies need to have a compensation committee
composed entirely of independent directors. [NYSE
Corporate Governance Standard 303A.05]
The compensation committee needs to have a written
charter that addresses certain specific purposes and
responsibilities of the committee and provides for an
annual performance evaluation of the committee.
[NYSE Corporate Governance Standard 303A.05]
Constitution of a Nomination Committee is not
mandatory and need not be comprised of independent
directors.
Pursuant to the Listing Agreement, constitution of a
nomination committee is non-mandatory and does not
require a charter for such a committee. The
performance evaluation of non-executive directors
could be done by a peer group comprised of the entire
Board of Directors, excluding the director being
evaluated.
It is a not mandatory under Clause 49 that the board
constitutes a compensation / remuneration committee
to determine on behalf of the board 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. To avoid any conflict of
interest, any compensation committee should consist of
at least three non-executive directors. The chairman of
compensation committee should be an independent
director.
Indian listing requirements do not require that a
compensation committee have a charter. However, the
non-mandatory requirements contained in Clause 49
provide that the board may set the terms of reference
of the compensation committee. The annual corporate
governance report of a company generally provides
details about remuneration, including brief details of the

 
Companies need to have an audit committee that
satisfies the independence requirements of Rule 10A-3
under the Exchange Act and the requirements of NYSE
Corporate Governance Standard 303A.02. [NYSE
Corporate Governance Standards 303A.06 and
303A.07]
The audit committee needs to have a written charter
that addresses certain specific purposes and
responsibilities of the committee, provides for an
annual performance evaluation of the committee and
sets forth certain minimum duties and responsibilities.
[NYSE Corporate Governance Standard 303A.07]

 %
 
Each listed company needs to have an internal audit
function to provide the management and audit
committee with ongoing assessments of the company¶s
risk management processes and a system of internal
control. A company may choose to outsource this
function to a third party service provider other than its
independent auditor. [NYSE Corporate Governance
Standard 303A.07]

terms of reference of any compensation committee.
The Indian Listing Agreement requires listed
companies to have a qualified and independent audit
committee and stipulates the powers and role of the
audit committee. All of the members of the audit
committee must be non-executive directors and at least
2/3rd of the members must be independent. All
members must be financially literate and at least one
member shall have accounting or related financial
management expertise. The Chairman of the
committee must be an independent director.
There is no requirement in Clause 49 of the Listing
Agreement that the audit committee must have a
written charter. However, Clause 49D sets forth the
roles of the audit committee which are required to be
performed by the audit committee of a listed company.
Though Clause 49 does not provide for a mandatory
internal audit, one of the roles of the audit committee is
µreviewing 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¶. Therefore, it is advisable
that the listed company should have a department that
conducts an internal audit.






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Companies need to adopt and disclose corporate
governance guidelines. [NYSE Corporate Governance
Standard 303A.09]
Companies need to adopt and disclose a code of
business conduct and ethics for directors, officers and
employees and promptly disclose any waivers of the
code for directors or executive officers. [NYSE
Corporate Governance Standard 303A.10]

 " 
 

The CEO of each listed company has to certify on an
annual basis that he or she is not aware of any
violation by the company of the NYSE corporate
governance listing standards. This certification, as well
as the CEO/CFO certification required under Section
302 of the Sarbanes-Oxley Act of 2002, should be
disclosed in the company¶s annual report to
shareholders. [NYSE Corporate Governance Standard
303A.12]
Further, the CEO of each listed company needs to
Listed companies are required to comply with the
provisions relating to the corporate governance as
prescribed under Clause 49 of the Listing Agreement
with Indian stock exchange(s). However, listed
companies are not required to disclose the said
provisions.
As per clause 49 of the Listing Agreement, a company
needs to adopt a code of conduct / ethics applicable to
the entire Board of Directors and all senior
management one level below the Board. A company¶s
annual report should state that by the Board members
and senior management are in compliance with code of
conduct / ethics.
In addition to the quarterly CEO/CFO certification on
the true and fair view of financial statement and
compliance with the prescribed accounting standards,
applicable laws and regulations, Indian listed
companies are also required to submit a quarterly
compliance report to the Indian stock exchange(s)
where their shares are listed.
There shall be a separate section of corporate
promptly notify the NYSE in writing after any executive
officer of the listed company becomes aware of any
material non-compliance with any applicable provisions
of this Section 303A.
governance in the annual report of the company, giving
details of the adoption and compliance with the
mandatory clauses and non-mandatory clauses (to the
extent applicable) of the Listing Agreement. A company
has to obtain a certificate issued by its auditors or
practising Company Secretary regarding compliance
with corporate governance rules and annex the same
to the directors¶ report to be sent annually to the
shareholders of the company and concerned stock
exchanges.