SEBI revises Clause 49 of listing agreement

CHENNAI, AUG. 26. The Securities and Exchange Board of India has approved certain amendments in Clause 49 of the listing agreement. These were based on the recommendations of the committee on corporate governance under the chairmanship of N. R. Narayana Murthy, constituted by SEBI, and public comments received thereon.

The SEBI has issued a circular on August 26 to all the stock exchanges, with the revision in clause 49 of the listing agreement. The revised clause 49 contains both the sub clauses of existing clause 49 as well as new sub-clauses. The amendments have been carried out inter-alia for strengthening the responsibilities of audit committees, improving the quality of financial disclosures including those related to related party transactions and proceeds from initial public offerings, requiring boards to adopt formal code of conduct, whistle blower policy and improving disclosures related to compensation paid to non-executive directors.

The SEBI has said that some of the sub-clauses of the revised Clause 49 shall be reviewed following the amendments to the Companies Act 1956 by the Companies (Amendment) Bill/Act 2003, so that the relevant provisions of the clauses on corporate governance in the listing agreement and the Companies Act, remain harmonious with one another.

All listed entities, having a paid up share capital of Rs. 3 crores and above or net worth of Rs. 25 crores or more at any time in the history of the entity, are required to comply with the requirements of revised clause 49 and they have been given time up to March 31, 2004. Till then, these entities shall continue to comply with the requirements of earlier circulars issued by SEBI.

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