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TMI BlogCorporate Governance in listed entities - Amendments to Clause 49 of the Equity Listing AgreementX X X X Extracts X X X X X X X X Extracts X X X X ..... g circulars on matters related to Corporate Governance clarifying certain provisions of the Companies Act, 2013: Sr. no. Reference Date Subject matter 1. Circular No.14/2014 June 09, 2014 Clarification on rules prescribed under the Companies Act, 2013- matters relating to appointment and qualification of directors and independent directors 2. Circular No.30/2014 July 17, 2014 Clarifications on matters relating to related party transactions 3. Notification August 14, 2014 Amendment to Company (Meetings of board and its powers) Rules, 2014 3. Post issuance of the SEBI circular dated April 17, 2014, SEBI vide letter dated August 12, 2014, sought the status of preparedness of top 500 listed companies by market capitalization, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 [email protected] Encl : Annexure - Amendments to Clause 49 of the Listing Agreement Annexure Amendments to Clause 49 of the Listing Agreement 1. Applicability of Clause 49 The Clause 49 of the Listing Agreement shall be applicable to all companies whose equity shares are listed on a recognized stock exchange. However, compliance with the provisions of Clause 49 shall not be mandatory, for the time being, in respect of the following class of companies: a. Companies having paid up equity share capital not exceeding ₹ 10 crore and Net Worth not exceeding ₹ 25 crore, as on the last day of the previous financial year; Provided that where the provisions of Clause 49 becomes applicable to a company at a later date, such comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors a. The company shall familiarise the independent directors with the company, their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company, etc., through various programmes. b. The details of such familiarisation programmes shall be disclosed on the company's website and a web link thereto shall also be given in the Annual Report." 7. Amendment to Clause 49(IV)(A) The clause shall be substituted with the following: " A. The company through its Board of Directors shall constitute the nomination and remuneration committee which shall comprise at least three directors, all of whom shall be non-executive directors and at least half shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a Court/Tribunal." Explanation (i): For the purpose of sub-clause (V)(A), the term "material non-listed Indian subsidiary" shall mean an unlisted subsidiary, incorporated in India, whose income or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated income or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. Explanation (ii): For the purpose of sub-clause (V)(C), the term "significant transaction or arrangement" shall mean any individual transaction or arrangement that exceeds or is likely to exceed 10% of the total revenues or total expenses or total assets or total liabilities, as the case may be, of the material unlisted subsid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y if: (i) such entity is a related party under Section 2(76) of the Companies Act, 2013; or (ii) such entity is a related party under the applicable accounting standards." 14. Amendment to Clause 49(VII)(C) The clause shall be substituted with the following: "(C)The company shall formulate a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. Provided that a transaction with a related party shall be considered material if the transaction / transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds ten percent of the annual consolidated turnover of the company as per the last audited financial statements of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he omnibus approval given. e. Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year" 16. Amendment to Clause 49(VII)(E) The following proviso and explanations shall be inserted after Clause 49(VII)(E): "Provided that sub-clause 49 (VII)(D) and (E) shall not be applicable in the following cases: (i) transactions entered into between two government companies; (ii)transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval. Explanation(i):For the purpose of Clause 49(VII), "Government compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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