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  • NEED TO AMEND THE PROVISIONS To align the provisions of the listing agreement with the provisions of the newly enacted Companies Act, 2013 and its notified Rules in March, 2014. To provide additional requirements to strengthen the Corporate Governance framework for the listed companies in India.
  • CLAUSE 35B Applicable to all listed companies. Governed by Companies (Management and Administration) Rules, 2014 The issuer company has to provide e-voting facility to its shareholders for all Shareholders Resolution to be passed at General meeting or through Postal Ballot. Such e-voting facility shall be kept open for such period specified under the rules. For those shareholders who do not have access to e-voting facility, the issuer should enable them to cast their vote in writing on Postal Ballot as per the Rules specified.
  • Provisions w.r.t. e-voting under Companies (Management and Administration) Rules, 2014 A member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system . A company which opts to provide the facility to its members to exercise their votes at any general meeting by electronic voting system shall follow the following procedure :- the notices of the meeting shall be sent to all the members, auditors of the company, or directors either by POST / Registered e-mail i.d. / Courier. the notice shall also be placed on the website of the company the notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means;
  • Provisions w.r.t. e-voting under Companies (Management and Administration) Rules, 2014 the notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner the e-voting shall remain open for not less than one day and not more than three days. Provided that in all such cases, such voting period shall be completed three days prior to the date of the general meeting. during the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically. Provided that once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.
  • Provisions w.r.t. e-voting under Companies (Management and Administration) Rules, 2014 the Board of directors shall appoint one scrutinizer, who may be chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an advocate, but not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner the results declared along with the scrutinizers report shall be placed on the website of the company within two days of passing of the resolution at the relevant general meeting of members subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members Issuer shall utilize the services of any one of the agencies providing e-voting platform which is in compliance with conditions specified by MCA from time to time.
  • CLAUSE 49: Corporate Governance Applicable to all listed companies w.e.f. October 1st, 2014 For other listed entities which are not companies but are body corporate or subject to regulations under other statues (e.g. banks, financial institutions, insurance companies, etc.) Clause 49 will apply to the extent it does not violate their respective statues. Provisions of Clause 49 (VI)(C) of Part B relating to Risk Management would be applicable only to Top 100 listed companies by market capitalization as at the end of the immediate previous year. Clause 49 is not applicable to Mutual Funds.
  • CLAUSE 49: Corporate Governance The New Clause 49 is divided into 11 major Sub clauses containing the provisions of compliances under Corporate Governance Norms. Enhanced disclosures are required to be made in the Annual Report. Separate Report on Corporate Governance to be part of Annual Report . Certificate is to be obtained by the company from the Auditor or Practicing Company Secretary.
  • CLAUSE 49: Corporate Governance Increased participation in the decision making. Right to place items on the agenda of the general meeting & propose resolutions subject to reasonable limitations. Exercise of ownership rights by all shareholders including institutional investors. Adequate mechanism to be maintained by the company to address the grievances of the shareholders. Protection to minority shareholders from the abusive actions of controlling shareholders directly or indirectly. SHAREHOLDERS
  • CLAUSE 49: Corporate Governance Right to be timely informed about the date, location and agenda of meeting & issues to be discussed. Right to be informed about the capital structures & arrangements. ALL INVESTORS CAN OBTAIN INFORMATION ABOUT THE RIGHTS ATTACHED TO ALL SERIES & CLASSES OF SHARES BEFORE THEY PURCHASE. SHAREHOLDERS
  • CLAUSE 49: Corporate Governance Effective redress for the violation of their rights. Encouraged mechanism for employee participation. Participation of Stakeholders in the Corporate Governance Process STAKEHOLDERS ROLE
  • Person who makes public the following MISCONDUCT FRAUD ILLEGAL ACTIVITY MISAPPROPRIATION happening within the organization.
  • CLAUSE 49: Corporate Governance Disclosure related to all material matters: Financial situation , performance, ownership and governance. Compliance and Disclosure of Accounting Standards. Maintenance of minutes of meeting explicitly recording dissenting opinion DISCLOSURES
  • CLAUSE 49: Corporate Governance Disclosure of material interest , if any (directly or indirectly) KEY FUNCTIONS OF BOARD :- Reviewing and guiding corporate strategy, major plans. Monitoring the effectiveness of the companys governance practices. Selecting, compensating, monitoring and when necessary, replacing key executives and overseeing succession planning.
  • CLAUSE 49: Corporate Governance Aligning key executive and board remuneration with the longer term interest of the company and its shareholders. Ensuring a transparent board nomination process. Monitoring and managing potential conflicts of interest amongst Board and stakeholder. Compliance with the law and relevant standards applicable while preparing Financial Statement. Overseeing the process of disclosure and communications. Monitoring and reviewing Board Evaluation framework.
  • CLAUSE 49: Corporate Governance COMPOSITION OF BOARD At least one Women Director . At least fifty percent of the Board should be comprised of Non- Executive Directors. If the chairman of the Board is Executive Director or Promoter, then at least half of the Board should be comprised of Independent Directors. If the Chairman of the Board of Board is Non Executive Director then at least one third of the Board should be comprised of Independent Director.
  • BOARD MEETINGS At least FOUR times a year with a maximum time gap of one hundred and twenty days between any two meetings. Director maximum membership in TEN committees. Director maximum Chairmanship in maximum FIVE COMMITTEES.
  • CLAUSE 49: Corporate Governance INDEPENDENT DIRECTOR Nominee Director is excluded from definition of Independent Director. who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience who is or was not a promoter of the company or its holding, subsidiary or associate company. who is not related to promoters or directors in the company, its holding, subsidiary or associate company
  • CLAUSE 49: Corporate Governance INDEPENDENT DIRECTOR apart from receiving director's remuneration, has or had no 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 Who is not less than 21 years of age.
  • CLAUSE 49: Corporate Governance INDEPENDENT DIRECTOR No. 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.
  • 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 doesnt 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.
  • INDEPENDENT DIRECTOR Formal Letter of appointment should be issued to the appointment of Independent Director as per Companies Act, 2013. Detailed profile of the Independent Director should be disclosed on the Website of the company . Intimate the Concerned Stock Exchange within ONE working day from the date of such appointment.
  • Evaluation Criteria as per Nomination Committee. Disclosure of Criteria in the Annual Report. Evaluation to be done by the Board excluding the director being evaluated. Further term of employment to be decided on the basis of performance evaluation report.
  • SEPARATE MEETING OF INDEPENDENT DIRECTORS at least one meeting in a year. All the independent directors of the company shall strive to be present at such meeting. to review the performance of non- independent directors and the Board as a whole. to review the performance of the Chairperson of the company. to assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
  • Compensation & Disclosures to Non-Executive Directors Fixed by the Board Of Directors Prior Shareholders approval in General Meeting Not Applicable for the payment of sitting fees to Non Executive Directors. PROHIBITION ON ISSUE OF STOCK OPTION TO INDEPENDENT DIRECTORS.
  • VACANCY OF INDEPENDENT DIRECTOR Any Vacancy arising in the office of any Independent Director whether due to : i. Resignation, or ii. Removal by Board Should be replaced at earliest BUT Not later than the immediate next Board Meeting OR three months from the date of such vacancy ( whichever is earlier )
  • CODE OF CONDUCT For all the Board members & Senior management. Post he code of conduct on the website of the company All Board members and senior management should affirm its compliance and Annual report should contain a declaration to this effect duly signed by the CEO. Incorporate the duties of Independent Directors as per Companies Act, 2013
  • LIABILITY OF INDEPENDENT DIRECTOR 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 . LIABLE : When he had not acted diligently with respect to the provisions contained in the Listing Agreement.
  • AUDIT COMMITTEE Constitution of a Qualified and Independent Audit Committee. MINIMUM : THREE DIRECTORS as members and Two Third of the members should be independent. All Members of Audit Committee shall be financially literate and at least one members shall have accounting or related financial management expertise. CHAIRMAN OF AUDIT COMMITTEE should be INDEPENDENT DIRECTOR. CHAIRMAN should be present at the A.G.M. to answer shareholder queries. Company Secretary shall act as the Secretary to the committee. MEETING OF AUDIT COMMITTEE : At least FOUR times in a year Maximum gap between two meeting : Four months QUORUM : TWO members OR one third of the members of the audit committee ( whichever is greater) Minimum TWO INDEPENDENT DIRECTOR must be present.
  • POWER OF AUDIT COMMITTEE To investigate any activity within its terms of reference. To seek information from any employee. To obtain outside legal or other professional advice. To secure attendance of outsiders with relevant expertise, if it considers necessary.
  • ROLE OF AUDIT COMMITTEE Review companys financial reporting process and the disclosure of its financial information. Recommendation for appointment, remuneration and terms of appointment of auditors of the company. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. Review the annual financial statements and auditor's report thereon before submission to the board for approval. Review the quarterly financial statements before submission to the board for approval. Review the application or end use of the proceeds from Public issue.
  • ROLE OF AUDIT COMMITTEE Review & monitor the independence & performance of the auditor. Approval of the Related Party Transactions and its conditions. Scrutiny of Inter Corporate Investments and Loans (u/s 186 of the Companies Act, 2013) Evaluation of the Internal Control & Risk Management System. Review he adequacy of the Internal Audit function. Discussion with the Internal Auditor and reviewing the findings of any suspected fraud & irregularities. Review the WHISTLE BLOWER MECHANISM.
  • ROLE OF AUDIT COMMITTEE Discussion with the Statutory Auditors of the Company before the audit commences about the Nature & Scope of his Audit. Look in to the reasons behind the defaults in the payment to the depositors, debenture holders, shareholders (if any). Approval of the appointment of CFO.
  • ROLE OF AUDIT COMMITTEE SPECIAL FOCUS ON FOLLOWING ITEMS OF FINANCIAL STATEMENTS :- Matters required to be included in the Directors Responsibility Statement to be included in the Board Report. Changes & Reason for any changes in the accounting policies. Accounting entries requiring accounting estimates. Significant adjustments made in the financial statement arising out of audit findings. Compliance with applicable Financial Reporting Framework and Listing Agreement. Disclosures w.r.t. Related Party Transactions. Any Qualification in the draft Audit Report.
  • ROLE OF AUDIT COMMITTEE MANDATORILY REVIEW THE FOLLOWING:- Management Discussion and Analysis of Financial Condition & Results of Operation. Statement of Significant Related Party Transactions. Management letters / letters of internal control weaknesses issued by the statutory auditors. Internal audit reports relating to internal control weaknesses. The appointment, removal and terms of remuneration of the Chief internal auditor
  • NOMINATION & REMUNERATION COMMITTEE MINIMUM STRENGHT : at least THREE Directors. All the members should be of Non Executive Category. At least half of them should be Independent. CHAIRMAN OF THE COMMITTEE should be INDEPENDENT DIRECTOR.
  • RESPONSIBILITIES W.R.T. SUBSIDIARY COMPANIES Minutes of the Board meetings of the unlisted subsidiary company shall be placed at the Board meeting of the listed holding company for review. The company shall formulate a policy for determining material subsidiaries and such policy shall be disclosed to Stock Exchanges and in the Annual Report.
  • RESPONSIBILITIES W.R.T. SUBSIDIARY COMPANIES At least one independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of a material non-listed Indian subsidiary company. Audit Committee of the listed holding company shall also review the financial statements, in particular, the investments made by the unlisted subsidiary company.
  • RESPONSIBILITIES W.R.T. SUBSIDIARY COMPANIES CONCEPT OF MATERIAL SUBSIDIARY : A subsidiary shall be considered as material If the investment of the company in the subsidiary exceeds twenty per cent of its consolidated net worth as per the audited balance sheet of the previous financial year OR If the Subsidiary has generated twenty per cent of the consolidated income of the company during the previous financial year.
  • RESPONSIBILITIES W.R.T. SUBSIDIARY COMPANIES Prior SPECIAL RESOLUTION is to be passed in following cases:- Disposal of shares of material subsidiary which would reduce its consolidated shareholding to less than 50% or cease its controlling rights over the subsidiary company. Selling / Disposing / Leasing of assets amounting to more than 20% of the assets of the material subsidiary.
  • RISK MANAGEMENT Applicable to the TOP 100 Companies by Market Capitalization as at the closing of the immediate previous year. The company shall lay down procedures to inform Board members about the risk assessment and minimization procedures. The Board shall be responsible for framing, implementing and monitoring the risk management plan for the company. The company shall also constitute a Risk Management Committee. The Board shall define the roles and responsibilities of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee
  • MEANING : RELATED PARTY TRANSACTION Transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged. RELATED PARTY - If one party has the ability to control the other party or exercise significant influence over the other party, directly or indirectly OR a related party under section 2(76) of the Companies Act, 2013.
  • MATERIAL RELATED PARTY TRANSACTION If the transaction / transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds FIVE PERCENT OF THE ANNUAL TURNOVER OR TWENTY PERCENT OF THE NET WORTH OF THE COMPANY AS PER THE LAST AUDITED FINANCIAL STATEMENTS OF THE COMPANY, whichever is higher.
  • MATERIAL RELATED PARTY TRANSACTION PRIOR APPROVAL OF AUDIT COMMITTEE. APPROVAL OF SHAREHOLDERS THROUGH Special Resolution. All existing material related party contracts or arrangements as on the date of this circular which are likely to continue beyond March 31, 2015 shall be placed for approval of the shareholders in the first General Meeting subsequent to October 01, 2014 OR before that.
  • DISCLOSURES Details of all material transactions with related parties shall be disclosed quarterly along with the compliance report on corporate governance. The company shall disclose the policy on dealing with Related Party Transactions on its website and also in the Annual Report
  • DISCLOSURES Any Deviation / Different treatment from the prescribed Accounting Standard while preparing the Financial Statements. Reasons for such Deviation Does such treatment represents a True & Fair View of the transaction or item of Balance - Sheet.
  • DISCLOSURES Details of all the elements of the remuneration packages of Directors including bonuses, stock options, performance linked incentives, etc. Disclosure of criteria of making payment to non- executive directors.
  • DISCLOSURES All pecuniary relationship or transactions of the non- executive directors vis--vis the company shall be disclosed in the Annual Report. Non-executive directors shall be required to disclose their shareholding (both own or held by / for other persons on a beneficial basis) in the listed company in which they are proposed to be appointed as directors, prior to their appointment. These details should be disclosed in the notice to the general meeting called for appointment of such director
  • DISCLOSURES Management Discussion and Analysis report should form part of the Annual Report to the shareholders. Senior management shall make disclosures to the board relating to all material financial and commercial transactions, where they have personal interest, that may have a potential conflict with the interest of the company at large. Disclosure to the Shareholders about the particulars of the Director being appointment, his shareholding, qualification, no. of directorships etc.
  • DISCLOSURES Disclosure of relationships between directors inter-se shall be made in the Annual Report, notice of appointment of a director, prospectus and letter of offer for issuances and any related filings made to the stock exchanges where the company is listed. Quarterly Results and presentations made by the company on the companys website. Disclose the letter of resignation along with the detailed reasons of resignation not later than one working day from the date of receipt of the letter of resignation.
  • DISCLOSURES The letter of appointment of the independent director along with the detailed profile shall be disclosed on the websites of the company and the Stock Exchanges not later than one working day from the date of such appointment. The details of training imparted to Independent Directors shall be disclosed in the Annual Report. Proceeds of the issue.
  • Under the chairmanship of Non Executive Director, Stakeholders Relationship Committee should be constituted to resolve the grievances of the security holders of the company including complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends. CONSTITUTION OF STAKEHOLDERS RELATIONSHIP COMMITTEE
  • That they have reviewed the Financial Statements. That the Financial Statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading. That to the best of their knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violate of the companys code of conduct. That they have indicated to the auditors and the Audit Committee the significant changes in the internal control and accounting policies during the year and have reported the instances of the significant suspected frauds and material weaknesses in the Internal Control System.
  • REPORT ON CORPORATE GOVERNANCE There shall be a separate section on Corporate Governance in the Annual Reports of company, with a detailed compliance report on Corporate Governance. Non-compliance of any mandatory requirement of this clause with reasons thereof and the extent to which the non-mandatory requirements have been adopted should be specifically highlighted. The companies shall submit a quarterly compliance report to the stock exchanges within 15 days from the close of quarter The report shall be signed either by the Compliance Officer or the Chief Executive Officer of the company.
  • COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE To be obtained by the company from the Auditor of the Company or from a Practicing Company Secretary. Such certificate shall become the part of Annual Report. Certificate is also to be submitted to Stock Exchange along with the Annual Report.
  • NON-MANDATORY REQUIREMENTS 1. The Board : A non-executive Chairman may be entitled to maintain a Chairman's office at the company's expense and also allowed reimbursement of expenses incurred in performance of his duties. 2. 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. 3. Audit qualifications : Company may move towards a regime of unqualified financial statements. 4. Separate posts of Chairman and CEO : The company may appoint separate persons to the post of Chairman and Managing Director/CEO. 5. Reporting of Internal Auditor : The Internal auditor may report directly to the Audit Committee.