Corporate Governance in listed Companies Clause 49 of the Listing Agreement

Clause 49 of the Listing Agreement · 2003-08-26 · SEBI

Summary

This section mandates the composition of the Board of Directors, requiring a minimum percentage of non-executive and independent directors based on the chairman's status. It establishes strict criteria for defining independent directors and outlines their compensation, disclosure obligations, and term limits. Additionally, it details the formation, qualifications, powers, and roles of the Audit Committee to ensure financial reporting integrity. This section outlines the Audit Committee's mandatory review of financial statements, risk management reports, and related party transactions. It establishes requirements for Whistle Blower policies, including protection against unfair termination and annual affirmations by the company. Additionally, it details specific disclosure obligations regarding contingent liabilities, director remuneration, IPO proceeds, and shareholder grievance redressal mechanisms. This section mandates CEO and CFO certification regarding financial statements, internal controls, and fraud disclosures. It requires a separate Corporate Governance report in annual filings and quarterly compliance submissions to stock exchanges. Finally, it stipulates an annual compli

Text

The board shall have not less than fifty percent non-executive directors; at least one-third must be independent if the chairman is non-executive, or half if executive.

An independent director is a non-executive director without material pecuniary relationships, family ties to management, recent employment history, or significant shareholding (>=2%).

All compensation for non-executive directors shall be fixed by the Board and approved by shareholders in general meeting, with limits on stock options vesting after at least one year post-retirement.

The company shall publish its compensation philosophy and statement of entitled compensation for non-executive directors in its annual report or website.

Non-executive directors must disclose their stock holdings prior to appointment, accompanying their notice of appointment.

Independent directors shall periodically review legal compliance reports and cannot claim unawareness as a defense in proceedings related to these responsibilities.

The board meeting shall be held at least four times a year, with a maximum time gap of four months between any two meetings.

A director shall not be a member in more than 10 committees or act as Chairman of more than five committees across all public limited companies.

It shall be obligatory for the Board to lay down a code of conduct for all Board members and senior management, posted on the company website.

A person shall be eligible for the office of non-executive director so long as the term of office did not exceed nine years in three terms of three years each.

The audit committee shall have minimum three members, all non-executive directors, with a majority being independent.

All members shall be financially literate and at least one member shall have accounting or related financial management expertise.

Source: SecMarx — Corporate Governance in listed Companies Clause 49 of the Listing Agreement. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.