CLAUSE 40 OF SEBI LISTING AGREEMENTS - SALIENT POINTS

1. CORPORATE GOVERNANCE -
AMENDMENTS
CLAUSE 49 OF THE LISTING AGREEMENT
WITH SEBI
Presented by :
Ajay Agarwal
Akhilesh Singh
Rawat
Alok Veer Yadav
Ashish Rawat
Awadhesh Kumar
Singh
Dharmesh Makwana
Harish Kumar
DATE OF CIRCULAR : April 17, 2014
APPLICABLE W.E.F. : October 1st, 2014

2. NEED TO AMEND THE PROVISIONS
To align the provisions of the
listing agreement with newly
enacted Companies Act.
Disclosure and transparency
on all material matters made in
the Annual Report
Responsibilities of Board more
stringent
Certificate from the Auditor or
Company Secretary
 Provide additional
requirements to
strengthen the Corporate
Governance framework
for the listed companies
to adopt best practices
on corporate governance
 Separate Report on
Corporate Governance

3. Increased participation in the decision making.
Right to place items on agenda of GM & propose
resolutions.
Adequate mechanism to address grievances of
shareholders
Protection of minority shareholders from the abusive
actions of controlling shareholders
Right to be timely informed - date, location and
agenda
Right to be informed about the capital structures
ALL INVESTORS CAN OBTAIN INFORMATION
ABOUT THE RIGHTS BEFORE THEY PURCHASE

4.  Seek relevant, sufficient and
reliable information on a timely and
regular basis to participate in
Corporate Governance process
 Play a role of a whistle blower
 Seek redressal for the violation
of rights.
 Effectively Participate in overall
in the Corporate Governance
Process
STAKEHOLDERS ROLE

5.  At least one Women Director .
 At least fifty percent of the Board should be
comprised of Non- Executive Directors.
 If the chairman of the Board is Executive
Director or Promoter, then at least half of the
Board should be comprised of Independent
Directors.
 If the Chairman of the Board of Board is Non –
Executive Director then at least one – third of
the Board should be comprised of
Independent Director.
COMPOSITION OF BOARD

6. INDEPENDENT DIRECTOR
 Nominee Director is not an Independent Director.
 a person of integrity and possesses relevant expertise and
experience
 not a promoter or related to company or its holding, subsidiary
or associate company.
 no pecuniary relationship with the company during the two
immediately preceding financial years or during the current
financial year
 not less than 21 years of age.
 the maximum number to serve restricted to 7.
 Maximum number of directorship serving as Whole Time
Director is maximum 3.
 Detailed profile of the Independent Director should be disclosed
on the Website of the company .

7. TERM OF INDEPENDENT DIRECTOR
Up to Five consecutive years
Eligible for reappointment on passing of a special
resolution by the company
not more than two consecutive terms
eligible for appointment after three years cooling
period
Performance evaluation report shall be the basis to
determine whether to extend or continue the term of
ID.
The Nomination Committee shall lay down the
performance evaluation criteria and the Company to
disclose the same in its Annual Report.
 Evaluation Criteria as per Nomination Committee.
 Evaluation to be done by the Board excluding the
director being evaluated.

8. BOARD MEETINGS
 At least FOUR times a year
with a maximum time gap of
one hundred and twenty days
between any two meetings.
 Director – maximum
membership in TEN
committees.
 Director – maximum
Chairmanship in maximum
FIVE COMMITTEES.

9. SEPARATE MEETING OF INDEPENDENT DIRECTORS
 at least one meeting in a year.
 all the independent directors of the company shall strive
to be present at such meeting.
 to review the performance of non-independent directors
and the Board as a whole.
 to review the performance of the Chairperson of the
company.
 to assess the quality, quantity and timeliness of flow of
information between the company management and the
Board that is necessary for the Board to effectively and
reasonably perform their duties.

10. AUDIT COMMITTEE
Constitution of a Qualified and Independent Audit Committee.
MINIMUM : THREE DIRECTORS as members and Two – Third of the
members should be independent.
All Members of Audit Committee shall be financially literate and at
least one members shall have accounting or related financial
management expertise.
CHAIRMAN OF AUDIT COMMITTEE should be INDEPENDENT
DIRECTOR.
CHAIRMAN should be present at the A.G.M. to answer shareholder
queries.
Company Secretary shall act as the Secretary to the committee.
MEETING OF AUDIT COMMITTEE :
At least FOUR times in a year
Maximum gap between two meeting : Four months
QUORUM :
TWO members OR one third of the members of the audit
committee ( whichever is greater)
Minimum TWO INDEPENDENT DIRECTOR must be present.

11. POWER OF AUDIT COMMITTEE
 To investigate any activity within its terms of reference.
 To seek information from any employee.
 To obtain outside legal or other professional advice.
 To secure attendance of outsiders with relevant
expertise, if it considers necessary.

12. ROLE OF AUDIT COMMITTEE
Review company’s financial reporting process
and the disclosure of its financial information.
Recommendation for appointment,
remuneration and terms of appointment of
auditors of the company and payment to
payment to statutory auditors
Review the annual financial statements and
auditor's report thereon before submission to
the board for approval.
Approval of the Related Party Transactions
and its conditions.
Evaluation of the Internal Control & Risk
Management System.

13. OTHER COMMITTEES
NOMINATION AND REMUNERATION COMMITTEE :
The Company shall set up a Nomination and
Remuneration Committee which shall comprise at least 3
directors, all of whom shall be non-executive directors
and at least 1/2 shall be independent.
Chairman of the committee shall be an independent
director
STAKEHOLDERS’ RELATIONSHIP COMMITTEE
The Company to constitute “Stakeholders’ Relationship
Committee” to redress the grievances of Shareholders,
Debenture holders and other Security Holders.
A Non-Executive Director shall be Chairman of the
Committee with such other members as may be decided
by the Board

14.  Disclosure related to all material matters: Financial
situation , performance, ownership and governance.
 Compliance and Disclosure of Accounting
Standards.
 Maintenance of minutes of meeting “explicitly
recording dissenting opinion”
Disclosure covers mainly :
Related Party Transactions
Disclosure of Accounting Treatment
Remuneration of Directors
Disclosure of resignation of directors
Disclosure of formal letter of appointment
Proceeds from public issues, rights issue,
preferential issues, etc.
DISCLOSURES

15. CEO/CFO certification
reviewed financial statements and the cash flow
statement
accept responsibility for establishing and maintaining and
evaluating the internal controls for financial reporting
Report on Corporate Governance
separate section on Corporate Governance in the Annual
Reports of company, with a detailed compliance report on
Corporate Governance
Compliance
obtain a certificate from either the auditors or practicing
company secretaries regarding compliance of conditions
of corporate governance
OTHER PROVISIONS…

16. Thank You