In a step towards making listed companies more transparent and to align the provisions related to listing agreement with the Companies Act 2013, Capital Markets Regulator, SEBI has approved series of amendments in Clause 49 of Listing Agreement by way of circular dated 17th April 2014. The said amendments will be effective from 1st October 2014.
In order to provide a holistic picture position of the proposed amendments vis-à-vis the provisions of the Companies Act 2013, a tabular comparison is given below:
| Particulars | New Provision of Clause 49/35B | Existing clause 49 | Companies Act, 2013 |
| Separation of nominee director and independent director | Nominee director shall be excluded from the definition of independent director. (Clause 49, Sub clause II (B)) | No such separation has been provided under this clause | Section 149 (6) of the Act states that Independent director is a director different from managing director or a whole time director or a nominee director. |
| Whistle blower mechanism | Mandatory establishment of vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation, also the mechanism should provide for adequate safeguards against victimisation of the directors/employees using the mechanism. (Clause 49, Sub -clause II (F)) | Whistle blower mechanism is one of the non mandatory requirement of the listing agreement provided in Annexure ID | Section 177 (9) of the Act requires listed companies to establish vigil mechanism for its directors and employees to report genuine concerns to the audit committee. It is also specified that a vigil mechanism must provides adequate safeguards against victimisation of the persons who use such mechanism |
| Stock options prohibited for independent directors | Prohibiting stock options for independent directors. (Clause 49, Sub-clause II (C)) | Granting of stock options to the independent directors is not prohibited but shall be reported in annual report under the head of corporate governance report | Section 197 (7) of the Act prohibits granting of stock options to Independent directors |
| Separate meeting of independent directors | Mandatory separate meeting for independent director, provisions related to such meetings are exactly same as laid down in the Companies Act, 2013 (Clause 49, Sub-clause II (B)(7)) | No such requirement | Schedule IV to the section 149 of the Act which is Code of conduct for independent directors provides for one separate meeting of independent director in a year, without attendance of other directors and members of management in the meeting. |
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