Clause 49 Essay

3358 Words Sep 4th, 2012 14 Pages

Clause 49 of Listing Agreement on Corporate Governance
—Dilip Kumar Sen

SEBI has revised Clause 49 of the Listing Agreement pertaining to corporate governance vide circular dated October 29, 2004, which supersedes all other earlier circulars issued by SEBI on this subject. The article highlights important changes in the corporate governance norms.


lause 49 of the Listing Agreement, which deals with Corporate Governance norms that a listed entity should follow, was first introduced in the financial year 2000-01 based on recommendations of Kumar Mangalam Birla committee. After these recommendations were in place for about two years, SEBI, in order to evaluate the adequacy of the existing practices and to
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This requirement finds place in the revised clause also

Agreement based on Murthy committee recommendations. This led to widespread protests and representations from the Industry thereby forcing the Murthy committee to meet again to consider the objections. The committee, thereafter, considerably revised the earlier

The author is Vice President, Tata Tea Ltd. He can be reached at



CORPORATE WORLD except that the relationship will now extend to its management, its holding company and its associates in addition to the existing list. Further the Board is no longer required to judge the independence status of a director as at present. Five new clauses have been added to determine independence of a director. These are: (i) He is not related to promoters or persons occupying management positions at the board level or at one level below the board; (ii) He has not been an executive of the company in the preceding three financial years; (iii) He is not a partner or an executive or was not partner or an executive during the preceding three years of (a) the statutory audit firm or the internal audit firm that is

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