Sebi included Clause 49 of the 2000 Equity Agreement (2000), which today serves as the corporate governance standard in India, as an important step in the codification of corporate governance standards. Clause 49 gave rise to the requirement that half of the directors on the board of directors of a publicly traded company must be independent directors. In the same clause, SEBI had proposed the powers of the audit committee, the majority of which would have independent directors. Article 49, when it was first added, is expected to introduce some fundamental corporate governance practices into Indian companies and introduce a number of important changes in governance and disclosures (many of which take us for granted today). It set the minimum number of independent directors required for a company`s board of directors. The creation of an audit committee and a shareholder appeals committee has been made mandatory, as has the Management Discussion and Analysis (MD&A) section and the corporate governance report in the annual report, as well as the disclosure of fees paid to non-executive directors. The number of committees on which a director was able to sit was limited. There must be a separate section of the RA on corporate governance and compliance. The company is expected to submit a corporate governance compliance report to the respective exchanges within fifteen days of the quarter close. There are certain requirements that are mentioned in clause 49 of the listing agreement and that a listed company must comply with. For a quick review of this important requirement, below is a summary. For good corporate governance, the company should provide all the necessary information.
It is also management`s responsibility to disclose all key issues that all stakeholders need to be aware of. In each of these areas, the revised Section 49 falls within the realm of global best practices (and sometimes even beyond). Article 49 of the listing agreement on the Indian Stock Exchange, which entered into force on 31 December 2005. It was formulated to improve corporate governance in all listed companies. The term “clause 49” refers to clause 49 of the listing agreement between a company and the exchanges on which it is listed (the listing agreement is identical for all Indian stock exchanges, including NSE and ESB). .