S.E.B.I. LISTING AGREEMENT

CLAUSE 49w.e.f. October 1st, 2014

Clause 49 of the Listing Agreement

Clause 49 of the Listing Agreement Applicable to Listed Companies Deal with the Corporate Governance Norms SEBI defines Corporate Governance as :

      "acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company."

NEED TO AMEND THE PROVISIONS OF Clause 49

To align the provisions of the listing agreement with the provisions of the newly enacted Companies Act, 2013

To provide additional requirements to strengthen the Corporate Governance framework for the listed companies in India.

COMPULSORY WHISTLE BLOWER MECHANISM

Person who makes public the following• MISCONDUCT

• FRAUD• ILLEGAL ACTIVITY

• MISAPPROPRIATIONhappening within the organization.

Sec. 165 of the Companies Act, 2013 provides the maximum number of directorship of any person to 20.

Further it lays down that the maximum number of directorship in a public company shall not exceed 10.

MAXIMUN NUMBER OF DIRECTORSHIPS

The SEBI recommendation are more stringent, where the maximum  number of Boards an independent director can serve on listed companies be restricted to 7.

Maximum number of directorship serving as Whole Time Director is maximum 3.

MAXIMUN NUMBER OF DIRECTORSHIPS

TERM OF INDEPENDENT DIRECTOR

TERM OF INDEPENDENT DIRECTOR  As per Companies Act, 2013, an independent director can hold up to two 

5 year terms after which there needs to be a 3 year cooling off period. The change made in Companies Act is PROSPECTIVELY (i.e. it doesn’t count

the time served already). The change proposed by SEBI takes into consideration the previous terms

( if a person has served as independent director on a board for 5 years or more, starting October 1st he shall be eligible to only one term of 5 years)

      

SEBI HAS IMPOSED STRINGENT

PROVISIONS WITH REGARD TO

INDEPENDENT DIRECTOR.

EXCLUSION OF NOMINEE DIRECTOR FROM THE DEFINITION OF INDEPENDENT DIRECTOR.

NOMINEE DIRECTOR IS NO MORE INDEPENDENT

EXPANDED ROLE OF AUDIT COMMITTEE

PROHIBITION OF STOCK OPTIONS TO INDEPENDENT DIRECTORS

SEPARATE MEETING OF INDEPENDENT DIRECTORS

INDEPENDENT DIRECTORS ONLY

CONSTITUTION OF STAKEHOLDERS RELATIONSHIP COMMITTEE

ENHANCED DISCLOSURE OF REMUNERATION POLICIES

PERFORMANCE EVALUATION OF INDEPENDENT DIRECTORS & BOARD OF DIRECTORS

PRIOR APPROVAL OF AUDIT COMMITTEE FOR ALL RELATED PARTY TRANSACTIONS

APPROVAL OF ALL MATERIAL RELATED PARTY TRANSACTIONS THROUGH SPECIAL RESOLUTION,

WITH ABSTAINING RELATED PARTIES FROM VOTING.

SPECIAL RESOLUTION

OTHER PROPOSALS vis-à-vis TO COMPANIES ACT, 2013 MANDATORY CONSTITUTION OF NOMINATION COMMITTEE“A nomination committees is focused on evaluating the board of directors of its respective firm and on examining the skills and characteristics that are needed in 

board candidates.”

CHAIRMAN OF THE COMMITTEE SHALL BE INDEPENDENT.

OTHER PROPOSALS vis-à-vis TO COMPANIES ACT, 2013 MANDATORY CONSTITUTION OF REMUNERATION COMMITTEE CHAIRMAN OF THE COMMITTEE SHALL BE INDEPENDENT.

OTHER PROPOSALS vis-à-vis TO COMPANIES ACT, 2013ATLEAST ONE WOMEN DIRECTOR ON THE BOARD.

OTHER PROPOSALS vis-à-vis TO COMPANIES ACT, 2013

WIDENED THE SCOPE OF RELATED PARTY TRANSATION

AS – 18  Companies Act, 2013

Definition of Related Party

OTHER PROPOSALS vis-à-vis TO COMPANIES ACT, 2013

E-VOTING FACILITY BY TOP 500 COMPANIES.

SUMMARY: The provisions of Companies Act applies to all the companies.

The provisions of Listing agreement is applicable for all the Listed Companies or on the companies seeking listing permission from stock exchange.

With mandating Whistle blower mechanism and carving out a certain more stringent provisions relating to Independent Directors, SEBI rings in tougher governance norms on listed companies as a condition of the Listing Agreement.

ANANND KANKNI+91-9707056733

COMPANY SECRETARY