REVISED CORPORATE GOVERNANCE NORMS RECOMMENDED BY SEBI IN ITS BOARD MEETING HELD ON 13th FEB., 2014. THESE NORMS WOULD BE APPLICABLE FROM 1st OCT. 2014

1. S.E.B.I.
LISTING AGREEMENT
CLAUSE ,49
w.e.f. October 1 2014
st

2. Clause 49 of the Listing Agreement

3. 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."

4. 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.

5. COMPULSORY WHISTLE BLOWER MECHANISM

6. Person who makes public the following
• MISCONDUCT
• FRAUD
• ILLEGAL ACTIVITY
• MISAPPROPRIATION
happening within the organization.

7. MAXIMUN NUMBER OF DIRECTORSHIPS
 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.

8. 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.

9. TERM OF INDEPENDENT DIRECTOR

10. 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.

11. EXCLUSION OF NOMINEE DIRECTOR FROM THE
DEFINITION OF INDEPENDENT DIRECTOR.
NOMINEE DIRECTOR IS NO MORE INDEPENDENT

12. EXPANDED ROLE OF AUDIT COMMITTEE

13. PROHIBITION OF STOCK OPTIONS
TO INDEPENDENT DIRECTORS

14. SEPARATE MEETING OF INDEPENDENT DIRECTORS
INDEPENDENT DIRECTORS ONLY

15. CONSTITUTION OF
STAKEHOLDERS RELATIONSHIP COMMITTEE

16. ENHANCED DISCLOSURE OF REMUNERATION POLICIES

17. PERFORMANCE EVALUATION OF
INDEPENDENT DIRECTORS & BOARD OF DIRECTORS

18. PRIOR APPROVAL OF AUDIT COMMITTEE
FOR ALL RELATED PARTY TRANSACTIONS

19. APPROVAL OF ALL MATERIAL RELATED PARTY
TRANSACTIONS THROUGH SPECIAL
RESOLUTION, WITH ABSTAINING RELATED PARTIES
FROM VOTING.

20. 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.

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

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

23. 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

24. OTHER PROPOSALS vis-à-vis TO COMPANIES ACT, 2013
E-VOTING FACILITY BY TOP 500 COMPANIES.

25. 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.

26. ANANND KANKNI
+91-9707056733
COMPANY SECRETARY