SEBI Clause 49 of the Listing Agreement

01 March 2000

Clause 49 of the Listing Agreement is an Annexure that directs business to improve their corporate governance norms in line with international standards.

Focus: Governance
Publishing date: 2000
Version: Final
Voluntary / Mandatory: Mandatory

Relevance to investor:
Improved corporate governance and declaration practices. This also mandates a minimum threshold for businesses that investors are assured of.

Predecessor policies / frameworks:
SEBI (Issue Of Capital And Disclosure Requirements) Regulations, 2009

Codify new corporate governance norms

Institution behind the policy / framework:
Securities and Exchange Board of India (SEBI), GoI

Target users:

  • By all entities seeking listing for the first time, at the time of listing
  • By all companies which were required to comply with the requirement of the clause 49"

Components of the policy / framework:
Key Mandatory provisions are as follows-

  • Composition of Board and its procedure – frequency of meeting, number of independent directors, code of conduct for Board of directors and senior management; Audit Committee, its composition and role.
  • Provision relating to Subsidiary Companies
  • Disclosure to Audit committee, Board and the Shareholders, CEO/CFO certification, Quarterly report on corporate governance, Annual compliance certificate

Key Non-mandatory provisions include the following:

  • Constitution of Remuneration Committee
  • Training of Board members
  • Peer evaluation of Board members
  • Whistle Blower policy

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