SEBI amendment to Cl.49 of Listing Agreement

S.No

Revised Cl.49 �SEBI�s Circular dt.� 17th Apr 2014

Amended Cl.49 � SEBI�s Circular dt:� 15th Sep 2014

Remarks

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Applicability:

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The revised �Clause 49 would be applicable to all listed companies w.e f October 01 ,2014.

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The Clause 49 of the Listing Agreement shall be applicable to all companies whose equity shares are listed on a recognized stock exchange

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Exemptions:

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Companies having paid up equity share capital not exceeding Rs.10 crore and Net Worth not exceeding Rs.25 crore, as on the last day of the previous financial year;

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Companies whose equity share capital is listed exclusively on the SME and SME-ITP Platforms

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Companies with share capital of not exceeding ₹10 crore and net worth of not exceeding ₹25 crore, besides those listed on the SME and SME�s institutional trading platforms (ITP), have been given the option of implementing SEBI�s corporate governance norms.

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If� the provisions of Clause 49 becomes applicable to a company at a later date, such company shall comply with the requirements of Clause 49 within six months from the date on which the provisions became applicable to the company

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Appointment of Women Director:Cl.49(II)(A)(1)

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The Board of Directors of the company shall least one woman director before 1st Oct 2014.

The provisions regarding appointment of woman director shall be applicable with effect from April 01, 2015.

The date of appointing a woman director on board has been postponed to the next fiscal (April 1, 2015)

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Independent Directors: Cl.49(II)(B)(1)(c)

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Apart from receiving director's remuneration,�has or had �no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year

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Apart from receiving director's remuneration, has or had no material pecuniary relationship with the company, its holding, subsidiary or associate�company, or their promoters, or directors, during the two immediately preceding�financial years or during the current financial year

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Now prohibits IDs from having 'material' pecuniary relationship with the company, its holding subsidiary/associate co, or their promoters, or directors.

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Maximum Tenure of IDs:

Cl.49(II)(B)(3)(a)

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An ID shall hold office for a term up to 5 consecutive years on the Board of a company and shall be eligible for reappointment for another term of up to five consecutive years on passing of a special resolution by the company.

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A person who has already served as an ID for 5 years or more in a company as on October 1, 2014 shall be eligible for appointment, on completion of his present term, for one more term of up to 5 years only.

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An ID, who completes his above mentioned term shall be eligible for appointment as ID in the company only after the expiration of 3 years of ceasing to be an ID in the company

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The maximum tenure of Independent Directors shall be in accordance with the Companies Act, 2013 and clarifications/ circulars issued by the Ministry of Corporate Affairs, in this regard, from time to time

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The maximum tenure for independent directors would be according to the Companies Act 2013..

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Formal letter of Appointment of IDs:

Cl.49(II)(B)(4)(b)

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The letter of appointment along with the detailed profile of ID shall be disclosed on the websites of the company and the Stock Exchanges not later than one working day from the date of such appointment

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The terms and conditions of appointment shall be� disclosed on the website of the company

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The Companies shall disclose the terms and conditions of appointment only on website and no need to disclose it to the stock exchanges.

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Training of IDs:

Cl.49(II)(B)(7)

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a. The company shall provide suitable training to independent directors to familiarize them with the company, their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company, etc.

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b. The details of such training imparted shall be disclosed in the Annual Report

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Familiarisation programme for IDs

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a. The company shall familiarise the independent directors with the company, their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company, etc.,�through various programmes.

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b. The details of such familiarisation programmes shall be disclosed on the company's website and a web link thereto shall also be given in the Annual Report.

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The training of IDs has been done away with the familiarisation programme for IDs and the details of such familiarisation programmes shall be disclosed on the company's website and a web link thereto shall also be given in the Annual Report.

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Nomination and Remuneration Committee:Cl.49(IV)(A)

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The company shall set up a nomination &remuneration committee which shall comprise at least three directors, all of whom shall be NEDs and at least half shall be independent. Chairman of the committee shall be an ID.

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The company through its Board of Directors shall constitute the nomination & remuneration committee which shall comprise at least three directors, all of whom shall be NEDs and at least half shall be independent. Chairman of the committee shall be an ID.

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The chairperson of the company (whether executive or nonexecutive) may be appointed as a member of the Nomination &remuneration Committee but shall not chair such Committee.

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The Chairman of a company has been allowed to be a member of the nomination and remuneration committee (earlier he was not a part), but cannot chair these committees � the chairmanship would remain with an independent director

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�Subsidiary Companies:

Cl. 49(V)(D)

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The company shall formulate a policy for determining �material� subsidiaries and such policy shall be disclosed to Stock Exchanges and in the Annual Report

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The company shall formulate a policy for determining �material� subsidiaries and such policy shall be disclosed on the company's website and a web link thereto shall be provided in the Annual Report.

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The Companies shall disclose their policy on 'material' subsidiaries only on website & Annual Report and no need to disclose it to the stock exchanges.

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Subsidiary Companies:

Cl.49(V)(F)

No company shall dispose of shares in its material subsidiary which would reduce its shareholding (either on its own or together with other subsidiaries) to less than 50% or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting

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No company shall dispose of shares in its material subsidiary which would reduce its shareholding (either on its own or together with other subsidiaries) to less than 50% or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal

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Requires Special Resolution when a company disposes of shares in its material subsidiary which would reduce its shareholding (either on its own or together with other subsidiaries) to less than 50% or cease the exercise of control over the subsidiary BUT exempts Scheme of Arrangements approved by Court/Tribunal from Special Resolution requirement

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Subsidiary Companies:

Cl.49(V)(G)

Selling, disposing and leasing of assets amounting to more than 20% of the assets of the material subsidiary shall require prior approval of shareholders by way of special resolution

Selling, disposing and leasing of assets amounting to more than 20% of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution, unless the ale/disposal/lease is made under a scheme of�arrangement duly approved by a� court/Tribunal

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No requirement for court/tribunal approved schemes involving selling/disposing & leasing of assets amounting to >20% of material subsidiary on an aggregate basis in a financial year.

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Risk management:

Cl.49(VI)

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The company shall also constitute a Risk Management Committee. The Board shall define the roles and responsibilities of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit

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The company through its Board of Directors shall constitute a Risk Management Committee. The Board shall define the roles and responsibilities of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit.

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The majority of Committee shall consist of members of the Board of Directors.

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Senior executives of the company may be members of the said Committee but the Chairman of the Committee shall be a member of the Board of Directors.

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The risk management committee of a company should have majority representation from the board, and has to be chaired by a board member, though senior executives may be inducted as members.

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Related Party Transactions Cl.49(VII)(A)

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A related party transaction is a transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged.

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A related party transaction is a transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged.

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A "transaction" with a related party shall be construed to include single transaction or a group of transactions in a contract

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A�transaction� with a related party shall be construed to include single transaction or a group of transactions in a contract

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Related Party Transactions Cl.49(VII)(B)

An entity is related to a company if any of the following conditions applies:

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a. The entity is a related party under Section 2(76) of the Companies Act, 2013; or

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b. The entity and the company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); or

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c. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); or

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d. Both entities are joint ventures of the same third party; or

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e. One entity is a joint venture of a third entity and the other entity is an associate of the third entity; or

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f. The entity is a post-employment benefit plan for the benefit of employees of either the company or an entity related to the company. If the company is itself such a plan, the sponsoring employers are also related to the company; or

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g. The entity is controlled or jointly controlled by a person identified in (1).

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h. A person identified in (1)(b) has significant influence over the entity (or of a parent of the entity); or

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an entity shall be considered as related to the company if:

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(i) such entity is a related party under Section 2(76) of the Companies Act, 2013; or

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(ii) such entity is a related party under the applicable accounting standards.

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The definition of related party is substituted by the one defined by companies� act 2013 and the applicable accounting standards.

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Related Party Transactions Cl.49(VII)(C)

The company shall formulate a policy on materiality of� RPTs and also on dealing with RPTs

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Provided that a transaction with a related party shall be considered material if the transaction / transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds 5% of the annual turnover or 20% of the net worth of the company as per the last audited financial statements of the company, whichever is higher

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The company shall formulate a policy on materiality of RPTs �and also on dealing with RPTs

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Provided that a transaction with a related party shall be considered�material if the transaction / transactions to be entered into individually or taken

together with previous transactions during a financial year, exceeds 10% of the annual consolidated turnover of the company as per the last audited financial statements of the company.

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A material RPT is one that if a transaction exceeds 10 per cent of a company�s annual turnover

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Related Party Transactions Cl.49(VII)(D)

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All� RPTs shall require prior approval of the Audit Committee.

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All RPTs shall require prior approval of the Audit�Committee. However, the Audit Committee may grant omnibus approval for RPTs proposed to be entered into by the company subject�to the following conditions:

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a. The Audit Committee shall lay down the criteria for granting the omnibus�approval in line with the policy on RPTs of the company and such approval shall be applicable in respect of transactions which are repetitive in nature.

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b. The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the company;

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c. Such omnibus approval shall specify (i) the name/s of the related party, nature of transaction, period of transaction, maximum amount of transaction that can be entered into,

(ii) the indicative base price / current contracted price and the formula for variation in the price if any and

(iii) such other conditions as the Audit Committee may deem fit;

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Provided that where the need for RPT cannot be foreseen and aforesaid details are not available, Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding Rs.1 crore per transaction.

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d. Audit Committee shall review, atleast on a quarterly basis, the details of RPTs entered into by the company pursuant to each of the omnibus approval

given.

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e. Such omnibus approvals shall be valid for a period not exceeding one year

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and shall require fresh approvals after the expiry of one year"

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Exemptions:

(i) transactions entered into between two government companies;

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(ii)transactions entered into between a holding company and its WOS whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

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The audit committee of the company has been allowed to grant omnibus approvals for proposed RPTs, provided the committee lays down a criteria for such approval.

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Related Party Transactions Cl.49(VII)(E)

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All material RPTs shall require approval of the shareholders through special resolution and the related parties shall abstain from voting on such resolutions.

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All material RPTs shall require approval of the shareholders through special resolution and the related parties shall abstain from voting on such resolutions.

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Exemptions:

(i) transactions entered into between two government companies;

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(ii)transactions entered into between a holding company and its WOS whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

�"Government company" shall have the same meaning as defined in Section 2(45) of the Companies Act, 2013."

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all entities falling under the

definition of related parties shall abstain from voting irrespective of whether the entity is a party to the particular transaction or not.

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RPTs between 2 govt companies or between �holding companies and WOS are exempted from prior audit committee approval & special shareholder resolution requirement

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Disclosures:

Cl.49(VIII)(A)(2)

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The company shall disclose the policy on dealing with RPTs on its website and also in the Annual Report

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The company shall disclose the policy on dealing with RPTs on its website and a web link thereto shall be provided in the Annual Report."

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The company shall disclose the policy on dealing with RPTs on its website and a web link thereto shall be provided in the Annual Report.

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Disclosure of Resignation of directors Cl49(VIII)(F),

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�Disclosure of formal letter of appointment

�Cl 49(VIII(G) and

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Disclosures in Annual report - Cl 49(VIII)(H)

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These clauses shall stand deleted.

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The clauses related to the disclosure of resignation of directors, letter of appointment and disclosure in annual report is deleted by the SEBI.

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CEO/CFO Certification:

Cl.49(IX)

The CEO, i.e. the Managing Director or Manager appointed in terms of the Companies Act, 1956 and the CFO i.e. the whole-time Finance Director or any other person heading the finance function discharging that function shall certify to the Board that

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The CEO or the Managing Director or manager or in their absence, a Whole Time

Director appointed in terms of Companies Act, 2013 and the CFO shall certify to the

Board that

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The certification has to be done by CEO or MD or Manager or Wtd valign="top" appointed in terms of Companies Act,2013 and CFO.

The certification by any other person heading the finance function has been done away with.