clause 49 for goa be meet 05 (1)

7/29/2019 Clause 49 for Goa BE Meet 05 (1)

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November 24, 2005

Overview o f Clause 49

on

Corpo rate Governance

Bharat Vasani, Group General Coun sel


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November 24, 2005

In t roduct ion

Genesis

Narayana Murthy Committees recommendations,

based on:

Naresh Chandra Committee Report onCorporate Governance;

The Sarbanes-Oxley Act of 2002; &

Listing Agreements of Nasdaq & NYSE

Dr. J.J. Irani Committee Report on new Company Law


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November 24, 2005

Areas covered in new Clause 49 - (1)

Board of Directors

Composition of Board; Independent Directors

Non executive directors compensation;

Board Meetings

Committee positions

Code of Conduct


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November 24, 2005


Audit Committee

Qualified and Independent

Meetings

Powers

Role

Review of information

Subsidiary Companies


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November 24, 2005


Disclosures

Basis of related party transactions

Accounting Treatment

Board Disclosures Risk management

Proceeds from public / rights / preferential

issues

Remuneration of DirectorsManagement

Shareholders


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November 24, 2005


CEO/CFO certification

Report on Corporate Governance

Compliance


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November 24, 2005

Board compos i t ion

At least 50% of Board to be non-executive If Chairman non-executive, atleast 1/3rd Board to be

independent

If Chairman executive, atleast 1/2 Board to be

independent


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November 24, 2005

Attr ibu tes o f independent d irecto r (1)

Independent director - non-executive

no material pecuniary relationships /transactions

with company, promoters, directors, senior

management, holding / subsidiary / associates which

may affect his independence

no relation with promoters / management at the

board level or at one level below board

not companys executive in past three financial years


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November 24, 2005

Attr ibu tes o f independent d irecto r (2)

is not and was not for the past 3 years a partner /executive of the statutory / internal audit firm or any

legal / consulting firm having material association with

company have been should not be a material supplier,

service provider or customer or a lessor or lessee of the

company not hold more than 2% of voting shares


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November 24, 2005

Attr ibu tes of independent director (3)

Nominee directors of investing / lending institutionstreated as independent contrary recommendation

made by Dr. JJI committee

Term material not defined- Dr. JJI Committee defined

it as 10% or more of recipient's gross revenues /receipts


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November 24, 2005

Non-execu t ive directors compensat ion

Fees / compensation to non-executive directors to befixed by Board and previously approved by

shareholders

Shareholders resolution to specify limits for maximum

stock options to non-executive directors in anyfinancial year and in aggregate


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November 24, 2005

Board Meet ings and Comm ittee posi t ions

Board to meet at least 4 times a year with a maximum

gap of 3 months between 2 meetings

Director not to be a member of more than 10

committees or Chairman of more than 5 committees

Audit Committee and Shareholders Grievance

Committee to be considered for limits


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November 24, 2005

Code of Conduct

Board to lay Code of conduct for Board members andsenior management and to post it on website

Board members and senior management to annually

affirm compliance with Code


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November 24, 2005

Audit Comm it tee (1)

Qualified and independent Audit Committeecomprising minimum 3 directors of which 2/3rd to be

independent

All members to be financially literate and at least one

to have accounting / financial management expertise

Chairman to be independent and be present at AGMs

to answer shareholders queries

Audit Committee to meet atleast 4 times in a year and

gap between 2 meetings not to exceed 4 months


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November 24, 2005

Audit Comm it tee (2)

RoleOversight of financial reporting process and

disclosure of financial information

Review the quarterly / annual financial

statements with the management before Boardsapproval, etc.

Review adequacy of internal controls

Review functioning of Whistle Blower

mechanism, if existing

Review disclosure of related party transactions


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November 24, 2005

Subs idiary Companies

At least one independent director of holding companyto be on board of material unlisted Indian company

(turnover / networth > 20% of consolidated figures)

Audit committee of listed holding company to review

financial statements of unlisted subsidiary, mainlyinvestments

Minutes of unlisted subsidiary to be placed before

board of listed holding company


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November 24, 2005

Disclosures

Procedures to inform Board about risk assessment andminimization procedures

Pecuniary relationships / transactions of non-executive

directors, criteria for payments to be published in

Annual Report Management Discussion & Analysis report to form part

of Annual Report

Quarterly results and presentations to analysts to be

put on companys website


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November 24, 2005

CEO / CFO cert i f icat ion

CEO & CFO to annually certify to the Board interaliathat

financial statements present true and fair view of

companys affairs

no transactions fraudulent, illegal or violative ofcompanys code of conduct


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November 24, 2005

Non-mandatory requirements (1)

Training to Directors on business model, risks, their

responsibilities and the best ways to discharge

them

Performance evaluation of non-executive directors

by a peer group comprising entire board excluding

the director being evaluated


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November 24, 2005

Non-mandatory requirements (2)

Whistle Blower policy for employees to report

concerns about unethical behaviour, suspected

or actual fraud or violation of code of conduct or

ethics policy Mechanism to provide adequate safeguards

against victimization of whistle blowers

Direct access to chairman of audit committee in

exceptional cases


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November 24, 2005

Conclus ion

Clause 49 may be aligned with new company law

requirements

Few more changes to Clause 49 may not be ruled

out before implementation date of December 31


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THANK YOU

clause 49 for goa be meet 05 (1)

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