CLAUSE 35B & 49 OF LISTING AGREEMENT OF SEBI

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SEBI HAS AMENDED THE CLAUSE 35B & 49 OF THE LISTING AGREEMENT FOR THE LISTED COMPANIES. CLAUSE 35B HAS MANDATED THE E-VOTING FOR PASSING THE RESOLUTION CLAUSE 49 DEALS WITH THE CORPORATE GOVERNANCE.

Transcript of CLAUSE 35B & 49 OF LISTING AGREEMENT OF SEBI

  • CORPORATE GOVERNANCE IN LISTED ENTITIES AMENDMENTS CLAUSES 35B & 49 OF THE EQUITY LISTING AGREEMENT DATE OF CIRCULAR : April 17, 2014 APPLICABLE W.E.F. : October 1st, 2014
  • 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
  • COMPULSORY WHISTLE BLOWER MECHANISM
  • 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 D