The Securities and Exchange Board of India [ Images ] (Sebi) has amended the equity listing agreement, asking companies to set up an agency to monitor the utilisation of issue proceeds. In a circular issued on Thursday, Sebi said, "It has been decided to amend Clause 49 of the equity listingagreement, requiring the issuer company to place the monitoring report before its audit committee."The audit committee will review the reports and the statement indicating material deviations in the utilisation of issue proceeds and make appropriate recommendations to the board of the company. Every issuer company will also be required to inform the material deviations in the utilisation of issue proceeds to the stock exchange and shall also make the adverse comments of audit committee/monitoring agency public through advertisements in newspapers.Further, Sebi has introduced Clause 52 in the equity listing agreement, requiring listed companies to file information with the exchange only through the Corporate Filing and Dissemination System (CFDS). "Listed companies shall, in a phased manner, be required to file information with the stock exchange only through CFDS," said the circular. Accordingly, 100 companies have been shortlisted by BSE and NSE to make their submissions through the CFDS from the period starting January 1, 2008.CFDS is a new portal, put in place jointly by BSE and NSE, which offers a XBRL-enabled common platform for listed companies to file such information, statements and reports as may be specified by these exchanges. It may be recalled that Sebi had earlier introduced a clause in equity listing agreement, mandating certain corporate information through the Electronic Data Information Filing and Retrieval (EDIFAR) system hosted by the National Informatics Centre on Sebi's behalf. EDIFAR will gradually be phased out and will be replaced by CFDS (www.corpfiling.co.in)."Over a period, other modes of sending public information to stock exchanges for compliance with clauses of Equity Listing Agreement shall be dispensed with, including filing through EDIFAR. Companies filing through CFDS are not required to make filing through EDIFAR," said Sebi.Winds of ChangeSebi amends Clause 49 of the equity listing agreement, requiring the issuer company to place the monitoring report before its audit committeeIntroduces Clause 52 in the agreement, requiring listed firms to file information with the exchange only through the Corporate Filing and Dissemination SystemFiling of certain corporate information through the Electronic Data Information Filing and Retrieval system will be discontinued in phasesElectronic filing through Corporate Filing and DisseminationSystem (CFDS), viz., www.corpfiling.co.in3.1 SEBI had, vide circular no. SMD/POLICY/Cir-13/02 dated June 20, 2002, introduced a clause in Equity Listing Agreement, which inter-alia mandated electronic filing of certain corporate information through the Electronic Data Information Filing and Retrieval (EDIFAR) system hosted by the National Informatics Centre on behalf of SEBI. It has been decided to phase out EDIFAR gradually in view of a new portal, viz., CFDS put in place jointly by BSE and NSE at the URL www.corpfiling.co.in. CFDS offers a XBRL enabled common platform for listed companies to file their returns with stock exchanges and also a common place for investors to view information related to listed companies.3.2 Accordingly, it has been decided to introduce a new clause viz., Clause 52 in Equity Listing Agreement, requiring listed companies to file information with the stock exchange only through CFDS. Over period, other modes of sending public information to stock Exchanges for compliance with clauses of Equity Listing Agreement shall be dispensed with. The companies, which are mandated to file information through CFDS or have been registered on CFDS on their own volition though not so mandated, need not file information through the EDIFAR system. The companies which have commenced filing through CFDS shall continue to do so through CFDS only.3.3 BSE and NSE (Participating Stock Exchanges), which jointly own and maintain CFDS, shall, in a phased manner, ensure that CFDS is made available to all listed companies for their

corporate filings, irrespective of the stock exchange on which the companies are listed. Participating Stock Exchanges shall shortlist companies, based on market capitalization and disseminate and publish the said list from time to time and make it available on the website of the Exchanges as well as on CFDS at the URL www.corpfiling.co.in.Clause 52

Corporate Filing and Dissemination System (CFDS), viz., www.corpfiling.co.in

 (1)        The company agrees – (a)        to file on the CDFS, such information, statements and reports as may be specified by the Participating Stock Exchanges in this regard. (b)        that the Compliance Officer, appointed under clause 47(a) and the company shall be responsible for ensuring the correctness, authenticity and comprehensiveness of the information, statements and reports filed under  this clause and also for ensuring that such information is in conformity with the applicable laws and the listing agreement. (c)        to ensure that the electronic filing of information through CFDS, pursuant to compliance with any clause of the listing agreement, shall be done within the time limit specified in the respective clause of the listing agreement.  (d)        to put in place such infrastructure as may be required to comply with the clause. Explanation: For the purposes of this clause – (i)         The term “Corporate Filing and Dissemination System (CFDS)” shall mean the portal at the URL www.corpfiling.co.in or such other website as may be specified by the participating stock exchanges from time to time to take care of exigencies, if any. (ii)        The term “Participating Stock Exchanges” shall mean the stock exchanges owning and maintaining CFDS. PROVIDED  ALWAYS  AND  THE  COMPANY HEREBY IRREVOCABLY  AGREES  AND DECLARES  THAT  unless  the  Exchange  agrees  otherwise  the Company  will not without the previous permission in  writing of  the  Central Government withdraw its  adherence  to  this agreement for listing its securities.AND  THE COMPANY HEREBY FURTHER AGREES AND DECLARES THAT  all or any of its securities listed on the EXCHANGE  shall remain on  the list entirely at the discretion of the  EXCHANGE  AND THAT, the Exchange may, in its absolute discretion, suspend or remove  the securities from the list at any time and for  any reason whatsoever. For the said suspended security to be re-admitted to dealings on the Exchange, the company shall  pay to the Exchange such amount as re-instatement fees as may  be prescribed by the Exchange from time to time.IN  WITNESS WHEREOF the Company has caused these presents  to be executed and its Common Seal to be hereunto affixed as  of the day and year first above written.

The Common Seal of the above named ____________________________________________was hereunto               affixed pursuant to a resolution passed at a meeting       (Signature of the Director)of the Board of Directors held on the  _______day of ______________________, 20___  in the presence of                _____________________________________________       (Signature of the Director)______________________Director(s) of the Company.

  Schedule I above referred to: Schedule of Company’s listed Securities 

  Kind of security (Shares)

   Number Issued

Nominal Value perShare

 Paid-upValue perShare Rs.

 TotalNominalValue Rs.

Total Paid-upValue

   DistinctiveNumbers

Rs. Rs.

             

             

 

Kind of security (Debentures)

 AmountRs.

 Unit Rs. Rate ofInterestPercent

Interest - due Date

 Date of Redemption

 Distinctive Numbers

             

             

                 

SCHEDULE OF LISTING FEESI.       Initial Listing Fee :                                                   Rs. 20,000                                             II.      Annual Listing Fee :          i)       Companies with paid-up capital* upto Rs. 5 crores             Rs. 10,000          ii)      above Rs. 5 crores and upto Rs. 10 crores                            Rs. 15,000          iii)     above Rs. 10 crores and upto Rs. 20 crores                          Rs. 30,000III.     Companies which have a paid-up capital* of more than Rs.20 crores pay additional fee of Rs.750/- for every increase of Rs.1 crore or part thereof.IV.     In case of debenture capital (not convertible into equity shares) of companies, the fees will be charged @ 25% of the fees payable as per the above mentioned scales.*      includes equity share, preference share, Fully Convertible Debenture, Partly Convertible Debenture capital and any other security which will be converted into equity shares.Note  :     The above Schedule of Listing Fee is uniformly applicable for all the companies irrespective of whether the Exchange is Regional or Non Regional. 

Corporate Filing and Dissemination System (CDFS).

Company will file on CDFS Corporate filing and Dissemination System, information, statements and reports as may be specified by stock exchanges owning and maintaining CFDS. The URL is www.corpfiling.co.in. [clause 52]. If information is filed on CDFS, filing same information on EDIFAR is not required clause 51(4) introduced w.e.f. 27-12-2007]  (EDIFAR discontinued - Company was required to provide information and reports on EDIFAR (Electronic Data Information Filing and Retrieval] website [clause 51] EDIFAR has been discontinued in view of CFDS maintained by BSE and NSE – SEBI circular No. CFD/DCR/3/2010 dated 16-4-2010)

Clause 52 states that CFDS (Corpfiling.co.in ) information must be filed. Intersting and pertinent to note is Corporate Governance Report and Action Taken against the Company by any Regulatory agency find a place only in EDIFAR and not in CORPFILING. One is at a loss to understand why corporates have to file part of the disclosures under Corpfiling and other in EDIFAR. Further as clause 52 was introduced most of the Companies/ Professional have thought it sufficient if Clause 52 is complied with.

A company like 'Satyam' need not mention any action taken against the Company by any Regulatory agency in corpfiling where as in EDIFAR it is a must. No body seems to know why EDIFAR is not functioning as it should have been.

Amendments-

Electronic filing through Corporate Filing and Dissemination System (CFDS), viz., www.corpfiling.co.in

1SEBI had, vide circular no. SMD/POLICY/Cir-13/02 datedJune 20, 2002, introduced Agreement, which inter-alia mandated electronic filing of certain corporate information through the Electronic Data Information Filing and Retrieval (EDIFAR) system hosted by the National Informatics Centre on behalf of SEBI. It has been decided to phase out EDIFAR gradually in view of a new portal, viz., CFDS put in place jointly by BSE and NSE at the URL www.corpfiling.co.in. CFDS offers a XBRL enabled common platform for listed companies to file their returns with stock exchanges and also a common place for investors to view information related to listed companies.

2 Accordingly, it has been decided to introduce a new clause viz., Clause 52 in Equity Listing Agreement, requiring listed companies to file information with the stock exchange only through CFDS. Over period, other modes of sending public information to stock Exchanges for compliance with clauses of Equity Listing Agreement shall be dispensed with. The companies, which are mandated to file information through CFDS or have been registered on CFDS on their own volition though not so mandated, need not file information through the EDIFAR system. The companies which have commenced filing through CFDS shall continue to do so through CFDS only.

3.BSE and NSE (Participating Stock Exchanges), which jointly own and maintain CFDS, shall, in a phased manner, ensure that CFDS is made available to all listed companies for their corporate filings, irrespective of the stock exchange on which Exchanges shall shortlist companies, based on market capitalization and disseminate and publish the said list from time to time and make it available on the website of the Exchanges www.corpfiling.co.in. the companies are listed. Participating Stock as well as on CFDS at the URL www.corpfiling.co.in.

Amendments to the Listing Agreement

Securities and Exchange Board of India vide its circular no.SEBI/CFD/DIL/LA/4/2007/27/12 dated December 27, 2007 has informed the stock exchanges that in order to bring more transparency in the governance of a listed company with regard to utilisation of issue proceeds and to enhance availability of and accessibility to the continuing disclosures by listed companies, it has been decided to amend Equity Listing Agreement. A copy of the abovementioned circular is enclosed herewith as Annexure A which is self explanatory.

Accordingly, two new clauses viz. Clause 43A and Clause 52 have been inserted in Equity Listing Agreement and two existing clauses viz. Clause 49 and Clause 51 of Equity Listing Agreement have been suitably amended.

Corporate Filing and Dissemination System (CDFS).-

Company will file on CDFS Corporate filing and Dissemination System, information, statements and reports as may be specified by stock exchanges owning and maintaining CFDS. The URL is www.corpfiling.co.in. [clause 52]. If information is filed on CDFS, filing same information on EDIFAR is not required clause 51(4) introduced w.e.f. 27-12-2007]  (EDIFAR discontinued - Company was required to provide information and reports on EDIFAR (Electronic Data Information Filing and Retrieval] website [clause 51] EDIFAR has been discontinued in view of CFDS maintained by BSE and NSE – SEBI circular No. CFD/DCR/3/2010 dated 16-4-2010)

Amendments to the Listing Agreement

Securities and Exchange Board of India vide its circular no.SEBI/CFD/DIL/LA/4/2007/27/12 dated December 27, 2007 has informed the stock exchanges that in order to bring more transparency in the governance of a listed company with regard to utilisation of issue proceeds and to enhance availability of and accessibility to the continuing disclosures by listed companies, it has been decided to amend Equity Listing Agreement. A copy of the abovementioned circular is enclosed herewith as Annexure A which is self explanatory.

Accordingly, two new clauses viz. Clause 43A and Clause 52 have been inserted in Equity Listing Agreement and two existing clauses viz. Clause 49 and Clause 51 of Equity Listing Agreement have been suitably amended.

What Are the Benefits of Corporate Governance?

1. Corporate governance comprises of a set of processes, policies and laws that impact the way in which a company is administered. Corporate governance gives importance to shareholders' welfare and also includes the relationships between the strategic goal of the company and its stakeholders. This relationship helps to sustain the business for a longer period.

Management

2. Good corporate governance allows even outsiders to assess the company on how well it is being governed. The core of corporate governance is its transparency and disclosure principles. An advantage with corporate governance is that the benefits are measurable. Good corporate governance ensures higher market valuation. Corporate governance initiatives should ensure that the board of control and management take the necessary steps that are in the best interest of the business of the company.

Transparency

3. Corporate governance encourages more transparency of the business, thereby attaining the trust of its stakeholders. This transparency is brought forward by improving access to capital and financial markets. Raising capital also becomes easier because of the support the company earns from its stakeholders. Asset diversification through mergers and acquisitions is made easier with a company that follows good corporate governance. Corporate governance practices encourage a system of internal control, which in turn leads to better profit margins. Thus, for a company, corporate governance initiatives make it possible to attract equity investors. The corporate value of the company is increased by adopting good corporate governance practices. If two companies have comparable financial records, institutional investors prefer to invest in the one that has shown a proven record as a well-governed company.

Benefits to Shareholders

4. Good corporate governance initiatives can assist the board of control and the management to act on objectives that are in the best interest of both the company and the shareholders. The shareholders also have greater security on the investments they have made because of the transparency and access to investment details. The shareholders are better informed on all important decisions of management, such as the sale of assets and amendments to articles.

Benefits to the National Economy

5. If a country has a reputation for its strong governance practices, this leads to greater confidence in the investors, which in turn leads to a good flow in capital. The reporting and accounting standards adopted by the country are also an important factor to bring in investments. Thus, good corporate governance practices can be beneficial for any country's national economy.

Compliance with the CG principles can benefit the owners and managers of companies and increase transparency and disclosure by:

• Improving access to capital and financial markets; • Help to survive in an increasingly competitive environment through mergers, acquisitions,

partnerships, and risk reduction through asset diversification;• Provide an exit policy and ensure a smooth inter-generational transfer of wealth and divestment

of family assets, as well as reducing the chance for conflicts of interest to arise.• Also, adopting good CG practices leads to a better system of internal control, thus leading to

greater accountability and better profit margins. • Good CG practices can pave the way for possible future growth, diversification, or a sale,

including the ability to attract equity investors – nationally and from abroad – as well as reduce the cost of loans/credit for corporations.

• Many businesses seeking new funds often find themselves obliged to undertake serious corporate governance reforms at a high cost and upon the demand of outsiders, often in a time of crisis. When the foundations are already in place investors and potential partners will have more confidence in investing in or expanding the company’s operations.

• Good CG can provide the proper incentives for the board and management to pursue objectives that are in the interest of the company and shareholders, as well as facilitate effective monitoring.

• Better CG can also provide Shareholders with greater security on their investment.• Better CG also ensures that shareholders are sufficiently informed on decisions concerning

fundamental issues like amendments of statutes or articles of incorporation, sale of assets, etc.• Empirical evidence and research conducted in recent years supports the proposition that it pays to

have good CG. It was found out that more than 84% of the global institutional investors are willing to pay a premium for the shares of a well-governed company over one considered poorly governed but with a comparable financial record.

The adoption of CG principles - as good CG practice has already shown in other markets - can also play a role in increasing the corporate value of companies.“If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere. If investors are not confident with the level of disclosure, capital will flow elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere. All enterprises in

that country suffer the consequences.” (Arthur Levitt, former chairman of the US Securities & Exchange Commission)

According to bse Clause 52. Corporate Filing and Dissemination System (CFDS), viz., www.corpfiling.co.in(1) The company agrees –(a) to file on the CFDS, such information, statements and reports as may be specified by the Participating Stock Exchanges in this regard.(b) that the Compliance Officer, appointed under clause 47(a) and the company shall be responsible for ensuring the correctness, authenticity and comprehensiveness of the information, statements and reports filed under this clause and also for ensuring that such information is in conformity with the applicable laws and the listing agreement."(c) to ensure that the electronic filing of information through CFDS, pursuant to compliance with any clause of the listing agreement, shall be done within the time limit specified in the respective clause of the listing agreement.(d) to put in place such infrastructure as may be required to comply with the clause.Explanation: For the purposes of this clause – (i) The term "Corporate Filing and Dissemination System (CFDS)" shall mean the portal at the URL

www.corpfiling.co.in or such other website as may be specified by the participating stock exchanges from time to time to take care of exigencies, if any.

(ii) The term "Participating Stock Exchanges" shall mean the stock exchanges owning and maintaining CFDS."

Benefits and Limitations

The concept of corporate governance has been attracting public attention for quite some time. It has been finding wide acceptance for its relevance and importance to the industry and economy. It contributes not only to the efficiency of a business enterprise, but also, to the growth and progress of a country's economy. Progressively, firms have voluntarily put in place systems of good corporate governance for the following reasons:

Several studies in India and abroad have indicated that markets and investors take notice of well managed companies and respond positively to them. Such companies have a system of good corporate governance in place, which allows sufficient freedom to the board and management to take decisions towards the progress of their companies and to innovate, while remaining within the framework of effective accountability.

In today's globalised world, corporations need to access global pools of capital as well as attract and retain the best human capital from various parts of the world. Under such a scenario, unless a corporation embraces and demonstrates ethical conduct, it will not be able to succeed.

The credibility offered by good corporate governance procedures also helps maintain the confidence of investors – both foreign and domestic – to attract more long-term capital. This will ultimately induce more stable sources of financing.

A corporation is a congregation of various stakeholders, like customers, employees, investors, vendor partners, government and society. Its growth requires the cooperation of all the stakeholders. Hence it imperative for a corporation to be fair and transparent to all its stakeholders in all its transactions by adhering to the best corporate governance practices.

Good Corporate Governance standards add considerable value to the operational performance of

a company by:

1. improving strategic thinking at the top through induction of independent directors who bring in experience and new ideas;

2. rationalizing the management and constant monitoring of risk that a firm faces globally; 3. limiting the liability of top management and directors by carefully articulating the

decision making process; 4. assuring the integrity of financial reports, etc.

It also has a long term reputational effects among key stakeholders, both internally and externally.

Also, the instances of financial crisis have brought the subject of corporate governance to the surface. They have shifted the emphasis on compliance with substance, rather than form, and brought to sharper focus the need for intellectual honesty and integrity. This is because financial and non-financial disclosures made by any firm are only as good and honest as the people behind them.

Good governance system, demonstrated by adoption of good corporate governance practices, builds confidence amongst stakeholders as well as prospective stakeholders. Investors are willing to pay higher prices to the corporates demonstrating strict adherence to internally accepted norms of corporate governance.

Effective governance reduces perceived risks, consequently reduces cost of capital and enables board of directors to take quick and better decisions which ultimately improves bottom line of the corporates.

Adoption of good corporate governance practices provides long term sustenance and strengthens stakeholders' relationship.

A good corporate citizen becomes an icon and enjoy a position of respects. Potential stakeholders aspire to enter into relationships with enterprises whose governance

credentials are exemplary. Adoption of good corporate governance practices provides stability and growth to the enterprise.

Effectiveness of corporate governance system cannot merely be legislated by law neither can any system of corporate governance be static. As competition increases, the environment in which firms operate also changes and in such a dynamic environment the systems of corporate governance also need to evolve. Failure to implement good governance procedures has a cost in terms of a significant risk premium when competing for scarce capital in today's public markets.

The Disadvantages of Corporate Governance

Corporations live and die by the decisions of its board of directors.

Corporate governance is the method by which a corporation is directed, its business practices controlled, and its vision for success communicated to its shareholders. Disadvantages of this method of leadership arise from a lack of oversight, sentimental business decisions by an entrenched board of directors, and the high cost of changing direction once a business path proves to be ineffective.

Family-Owned Companies

2. Corporate governance works at its best when shareholders and board members are able to make objective decisions that are in the best interest of the company. According to Ibis Associates, a business planning firm, family-run corporations (founding family members own controlling share of the company), such as Ford and Wal Mart, lose objectivity in business making decisions due to the family's financial investment in the business' performance and the emotional ties associated with building a worldwide corporation from the ground up.

Easily Corruptible

3. Corporate governance needs a certain level of government oversight to avoid increasing levels of corruption. This is certainly true of areas in corporate finance and banking where deregulation of the industry through 2001-2004 contributed to predatory lending practices and created a credit crises for millions of Americans. According to Jonathan Brown, author of "The Separation of Banking and Commerce," the lack of governmental oversight in corporate governance lead to a misallocation of credit that actually worked against competition. Banks stopped competing with one another.

Costs of Monitoring

4. To effectively govern a publicly traded corporation, shareholders must speak with one voice and have enough votes to allow that voice to have any real weight. This requires individuals that have a collective vision for the company to pour more money into that company to gain a controlling share. This process can be highly political, since controlling shareholders that sense a hostile takeover may attempt to buy up more shares to stay in power and keep the minority party silent. Corporate governance at this level could grind to a halt, driving stock prices lower and hindering a corporation's ability to make smart business decisions.

Role of corporate governance in corporate entity-

What Is the Role of Corporate Governance in Business?Corporate governance is the convergence of economics and relationships that determine a company's direction and performance. Its purpose is to optimize resources to promote accountability and efficiency within the corporate structure. Most companies' corporate governance is set by their boards of directors, which establish and promote policies for the management and employees of the corporation. The board of directors is responsible to shareholders and customers for the corporation's outcomes.

1. Board of Directors-The board of directors is a corporation's primary rule-making body. Its members are generally high-level professionals with strong management backgrounds and/or an understanding of common financial and business practices. Members by and large have a common stake in the corporation's success.

2. Policies and Actions-Using complicated economic modeling of various hypothetical scenarios to predict return on investment, the board develops a set of policies and actions for corporate managers and employees to carry out. Policies and actions are commonly profit-driven. In other words, the main objective of a policy or action is to produce a positive return on investment for the corporation as well as its shareholders and customers to which it's accountable.

3. Corporate Governance Structure-For a board to be effective, it must also have a way to guarantee accountability. This is an important feature of whether or not the corporate governance structure is successful. For example, if a policy or action isn't properly carried out and/or the results that were expected either didn't occur or fell short of the goal, there must be

a system in place to make adjustments. The board also determines these correctional steps for management to administer to avoid future mistakes.

4. Shareholder Accountability-Corporate governance ultimately determines the success or failure of a corporation. It's therefore important that shareholder and customer input are appropriately factored into all decisions made by the board. After all, it's the financial investment of these groups that enables a corporation to operate. To ensure this occurs, the board holds regular shareholder meetings to report on earnings and to discuss the direction of the corporation. The shareholders are able to inform and guide the discussion to ensure a favorable outcome.

5. Customer Accountability-Customer feedback is collected in a less direct way than shareholder input, but is just as important to a corporation's bottom line. Customer feedback is based on consumer trends and the extent to which goods are bought and sold, which are reflected by the corporation's quarterly profits. If a corporation does well, it's said to have exceeded or met its earnings goals for the quarter. If a corporation performs poorly, it's said to have underperformed its anticipated earnings goals for the quarter.