The need for ethical governance has been deemed necessary after recent events, particularly in the United States. The United States responded to these events by passing the Sarbanes Oxley Act in 2002, which led to fundamental changes in all aspects of corporate governance. The revised clause 49 of the registration agreement has broadened the scope of corporate governance in India and provides for a whistleblowing policy, a compliance relationship with the issuance of the certificate of compliance, an expanded definition of the independent director, disclosure requirements, etc. [3] As discussed above, this revised clause has broadened the scope of corporate governance in companies listed in India and should provide a framework for good governance. The provisions of the amended paragraph 49 provide for the formation of a risk management committee. It also provides that the Board of Directors may define the tasks and responsibilities of the Risk Management Committee and may delegate the oversight and review of the risk management plan to the Board and any other function it deems appropriate. This clause obliges the Company to provide its shareholders with an electronic voting option with respect to all shareholder resolutions to be adopted at general meetings or by postal vote. The Company is required to obtain a certificate of compliance with the corporate governance set out in this clause and to attach this certificate to the director`s report, which is sent annually to the Company`s shareholders. The same certificate must be sent to the scholarships with the annual report. The auditors or working secretaries in office issue the certificate. Following the passage of the Companies Act 2013, the Securities and Exchange Board of India (SEBI) made certain amendments to the listing agreement in its Circular No. CIR/CFD/POLICY CELL/2/2014 dated 17 April 2014.
Among the amendments to clause 49 of the Registration Agreement (“Clause 49”), SEBI issued a new circular on 15 September 2014 amending Clause 49, aligning it with the Companies Act 2013 (“Act”). This circular entered into force on 1 October 2014. This amendment also provides that a company`s interest in one of its main subsidiaries may be reduced to less than 50 % or that an entity may cease control of the subsidiary by means of a special resolution at a general meeting. However, if the reduction results from an assignment made under a plan of arrangement duly approved by the court, that company is not required to pass a special resolution at the general meeting approving such a reduction or loss of control. Listing refers to the admission of securities to trading on a recognized stock exchange[1]. The separate listing department grants approval for the listing of company securities in accordance with the provisions of the Securities Contracts (Regulation) Act 1956, the Securities Contracts Rules 1957, the Companies Act 2013, the SEBI Guidelines and the Exchange Rules, By-Laws and Regulations. Companies enter into a listing agreement with the exchange and make certain disclosures and perform certain actions. The listing service monitors companies` compliance with the regulations. Clause 49 of the listing agreement applies to all listed companies through the official circular with effect from 1 October 2014. Other companies that are not a corporation per se, but that report to the head of the corporation and are governed or regulated by another law, the clause applies to them until it complies with their law. In the event that any provision of the clause violates the law in question, the registration contract will no longer apply. This clause does not apply to investment funds.
The revised Articles 35B and 49 are, of course, another step among many others that SEBI has taken to achieve the overall objective of corporate governance, disclosure and protection of shareholders` interests. An independent director is liable only for acts of omission or commitment of a corporation that have been attributable to the independent director`s knowledge, through the processes of the board of directors and with its consent or tolerance, or if the independent director has not acted carefully with respect to the provisions of the registration agreement; As a result of the amendment, the principles of corporate governance were set out in section 49. It is also expressly emphasized that the provisions may be translated in cases of ambiguity and associated with the above-mentioned principles. The principles are as follows: In order to align with the provisions of the Companies Act 2013 and the rules set out therein, to adopt best practices in corporate governance and to make the corporate governance framework more effective, SEBI has adopted a corporate governance framework in accordance with its circular of 17 September. April 2014 Clause 35B and Clause 49 of the Listing Agreement have been amended and revised. According to the clause, no one may be an independent director of more than seven listed companies. If a person acts as chief executive officer of a listed company, he or she cannot be the independent director of more than three listed companies. Under amended section 49, a “related party” is a natural or legal person associated with the Corporation. The Parties are deemed to be related if one of the Parties has the capacity to directly or indirectly control the other Party in financial and/or operational decisions or to exercise significant influence over the other Party and includes the following: A person or a close family member if that person (a) is a related person under section 2(76) of the Companies Act, 2013; or (b) has joint control or control or significant influence over the Company; or (c) is an officer in key positions of the Company or a parent company of the Company; Clause 49 was added to the listing agreement following the recommendations of the Kumaramangalam Birla Committee on Corporate Governance of Sebi. The clause initially recommended a basic corporate governance practice for Indian companies and made significant changes in the areas of governance and disclosure. It has made mandatory the following requirements: In accordance with General Circular No.
20/2014, issued by the Ministry of Corporate Affairs on the 17th. In June 2014, that Ministry clarified that the provisions of the 2013 Law on Joint-stock Companies concerning electronic voting are only mandatory on 31 December 2010. However, as previously mentioned, the revised clause 35B on electronic voting will come into effect on October 1, 2014. Therefore, a clarification in this regard by SEBI would be necessary. With respect to related party transactions, section 49 as amended covers a wide range of related party relationships and includes all parties treated as related parties under the Companies Act, 2013. Non-mandatory clauses include a whistleblower policy and term limits for independent directors. .