Comparison For New Clause 49 - With Old Clause 49 q501i

CLAUSE – 49 OF THE LISTING AGREEMENT CORPORATE GOVERNANCE Comparison between the provisions of Old Clause 49 of the Listing Agreement and the provisions of the said Clause after considering the amendments which are effective from 01.10.2014 and Circular dated 15th September, 2014 issued by SEBI Sl. No. Applicability of Clause 49

New Clause 49 Applicable from 1/10/2014 The new Clause 49 shall be applicable to all listed companies, however the compliances will not be mandatory for time being in respect of following class of companies:

Old Clause 49 No such provision

i) companies having paid up equity capital/ net worth not exceeding Rs. 10/ Rs. 25 crores as on last day of previous financial year. However on applicability the same shall be complied with six moths from its applicability ii)

1.

2.

companies whose equity shares are listed exclusively on SME and SME-ITP platforms. I. Shareholders A. Rights of Shareholders The company should seek to protect and facilitate the exercise of shareholders‘ rights. i) The Right to participate in, and to be sufficiently informed on, decisions concerning fundamental corporate changes ii) The opportunity to participate effectively and vote in general shareholder meetings. iii) Should be informed of the rules, including voting procedures. iv) Shareholders should have the opportunity to ask questions to the board, to place items on the agenda of general meetings, and to propose resolutions, subject to reasonable limitations. v) Effective shareholder participation in key Corporate Governance, decisions should be facilitated. vi) The exercise of ownership rights by all shareholders, including institutional investors, should be facilitated. vii) Company should have an adequate mechanism to address the grievances of the shareholders viii)Minority shareholders should be protected from abusive actions, either directly or indirectly, and should have effective means of redress. The company should provide adequate and timely information to shareholders. i) Shareholders should be furnished with sufficient and timely information, as well as full information regarding the issues to be discussed at the meeting. ii) Capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed. iii) All investors should be able to obtain information about the rights attached to all series and classes of shares before they purchase.

No such provision

No such provision

3

4.

5.

The company should ensure equitable treatment of all shareholders, including minority and foreign shareholders. i) Shareholders of the same series of a class should be treated equally. ii) Effective shareholder participation in key Corporate Governance decisions. iii) Exercise of voting rights by foreign shareholders should be facilitated. iv) Company should devise a framework to avoid Insider trading and abusive self-dealing. v) Processes and procedures should allow for equitable treatment of all shareholders. vi) Company procedures should not make it unduly difficult or expensive to cast votes.

No such provision

B. Role of stakeholders in Corporate Governance The company should recognize the rights of No such provision stakeholders and encourage co- operation between company and the stakeholders. i) Rights that are established by law or through mutual agreements are to be respected. ii) Stakeholders should have the opportunity to obtain effective redress for violation of their rights. iii) Company should encourage mechanisms for employee participation. iv) Stakeholders should have access to relevant, sufficient and reliable information on a timely and regular basis. v) Company Should Devise an Effective Whistle Blower Mechanism. C. Disclosure and Transparency The company should ensure timely and accurate disclosure on all material matters including the financial situation, performance, ownership, and governance of the company i) Information should be prepared and disclosed in accordance with the prescribed standards of ing, financial and non-financial disclosure ii) Channels for disseminating information should provide for equal, timely and cost efficient access to relevant information by s. iii) The company should maintain minutes of the meeting explicitly recording dissenting opinions, if any. iv) The company should implement the prescribed ing standards in letter and spirit in the preparation of financial statements, and should also ensure that the annual audit is conducted by an independent, competent and qualified auditor.

No such provision

S.No

New Clause 49 applicable from 1/10/2014 D. Responsibilities of the Board

Old Clause 49

6.

Disclosure of Information i) of the Board and key executives should disclose to the board whether they, directly, indirectly or on behalf of third parties, have a material interest in any transaction or matter directly affecting the company. ii) The Board and top management should meet the expectations of operational transparency to stakeholders while at the same time maintaining confidentiality of information.

No such provision

7.

Key functions of the Board

No such provision

i) Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major capital expenditures, acquisitions and divestments. ii) Selecting, compensating, monitoring and, when necessary, replacing key executives and overseeing succession planning. iii) Aligning key executive and board remuneration with the longer term interests of the company and its shareholders. iv) Ensuring a transparent board nomination process with the diversity of thought, experience, knowledge, perspective and gender in the Board. v) Monitoring and managing potential conflicts of interest of management, board and shareholders, including misuse of corporate assets and abuse in related party transactions. vi) Ensuring the integrity of the company‘s ing and financial reporting systems, including the independent audit, vii) Overseeing the process of disclosure and communications, viii) Monitoring and reviewing Board Evaluation framework

S.No 8.

New Clause 49 applicable from 1/10/2014 Other responsibilities i) The Board should provide the strategic guidance to the company, ensure effective monitoring of the management and should be able to the company and the shareholders. ii) The Board should set a corporate culture and the values by which executives throughout a group will behave. iii) Board should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and the shareholders. iv) The Board should encourage continuing directors training to ensure that the Board are kept up to date. v) Where Board decisions may affect different shareholder groups differently, the Board should treat all shareholders fairly. vi) The Board should apply high ethical standards and should be able to exercise objective independent judgment on corporate affairs. vii) The Board should be able to exercise objective independent judgment on corporate affairs. viii) Boards should consider asg a sufficient number of non-executive Board capable of exercising independent judgment to tasks where there is a potential for conflict of interest. ix) The Board should ensure that, while rightly encouraging positive thinking, these do not result in over-optimism that either leads to significant risks not being recognized or exposes the company to excessive risk. x) The Board should have ability to ‗step back‘ to assist executive management by challenging the assumptions underlying: strategy, strategic initiatives (such as acquisitions), risk appetite, exposures and the key areas of the company's focus. xi) When committees of the board are established, their mandate, composition and working procedures should be well defined and disclosed by the board. xii) Board should be able to commit themselves effectively to their responsibilities. xiii) In order to fulfill their responsibilities, board should have access to accurate, relevant and timely information. xiv) The Board and senior management should facilitate the Independent Directors to perform their role effectively as a Board member and also a member of a committee.

Old Clause 49 No such provision

S.No 1.

2.

II. Board of Directors A. Composition of Board New Clause 49 applicable from 1/10/2014 Old Clause 49 The Board of Directors of the company shall The Board of directors of the company have an optimum combination of executive and shall have an optimum combination of non-executive directors with at least 1 woman executive and non-executive directors director and not less than 50% of the Board of with not less than fifty percent of the Directors comprising non-executive directors. board of directors comprising of nonexecutive directors. Appointment of Women Director shall be applicable w.e.f. April 1, 2015. Where the Chairman of the Board is: Same (i) Non-Executive, a minimum of 1/3rd of the Board should comprise of Independent Directors (ii) Executive, a minimum of ½ of the Board should comprise of Independent Directors (iii) In case Non-executive Chairman is the promoter of the Company, at least 1/2 of the Board to be independent (iv) Minimum age of independent Directors shall be 21 years. (v) An independent director who resigns or is removed from the Board of the Company shall be replaced by a new independent director within a period of not more than 180 days from the day of such resignation or removal, as the case may be.

B. Independent Directors 3.

Definition: As compared to Section 149 of the Companies Act, 2013 (Attached as per Annexure – I)

4.

Limit on number of directorships i) A person shall not serve as an independent director in more than seven listed companies. ii) Any person who is serving as a whole time director in any listed company shall serve as an independent director in not more than three listed companies. New Clause 49 applicable from 1/10/2014

No such provision.

Maximum tenure of Independent Directors

No such provision

S.No 5.

i)

shall be in accordance with the Companies Act, 2013 and Clarifications/circulars issued by the Ministry of Corporate Affair, in this Regard from time to time.

Old Clause 49

6.

Formal letter of appointment to Independent Directors i)

7.

The company shall issue a formal letter of appointment to independent directors in the manner as provided in the Companies Act, 2013.

ii) The and conditions of Appointment shall be disclosed on the website of the Company. Performance evaluation of Independent Directors i)

No such provision

No such provision

The Nomination Committee shall lay down the evaluation criteria for performance evaluation of independent directors.

ii) Evaluation criteria as laid down by the Nomination Committee, shall be disclosed in its Annual Report. iii) The performance evaluation of independent directors shall be done by the entire Board of Directors (excluding the director being evaluated).

8.

iv) On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director. Separate meetings of the Independent Directors

No such provision

i) All independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and of management in order to review the performance of the Chairman, Non Independent Directors and the Board, etc. . All Independent Directors shall strive to be present at such meeting. 9.

Familiarization programme for Independent Directors i) The Company shall familiarize 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.

No such provision

ii) The details of such familiarization programmes shall be disclosed on the company‘s website and a web link thereto shall also be given in the Annual report. C. Non-Executive Directors’ Compensation and Disclosure 10.

11.

12.

All fees / compensation, if any paid to nonSame executive directors, including independent directors, shall be fixed by the Board of Directors and shall require previous approval of shareholders in general meeting. D. Meeting of Board of Directors The Board shall meet at least four times a year, The board shall meet at least four with a maximum time gap of 120 days between times a year, with a maximum time any two meetings gap of 4 months between any two meetings. List of items is specified which must be placed Same before the Board in every meeting. (As per Annexure- II) (As per Annexure-II) E. Other hip of Directors

13.

A Director shall not be a member of more than 10 committees*

Same

14.

A Director shall not act as Chairman of more than 5 committees*

Same

15.

Every director shall inform the company about the committee positions he occupies in other companies and notify changes as and when they take place.

Annual requirement for every director to inform the company about the committee positions he occupies in other companies and notify changes as and when they take place.

* It applies to the Committees of only public limited companies whether listed or not. * For the purpose of reckoning the aforesaid limit only Audit Committee and Shareholders‘ Grievance Committee shall be considered. 16.

17.

The Board shall periodically review compliance reports of all laws applicable to the company, prepared by the company as well as steps taken by the company to rectify instances of non compliances. An independent director who resigns or is removed from the Board of the Company shall be replaced by a new independent director at the earliest but not later than the immediate next Board meeting or 03 months from the date of such vacancy, whichever is later.

Same

An independent director who resigns or is removed from the Board of the Company shall be replaced by a new independent director within a period of 180 days from the date of such resignation.

18.

19. 20.

21.

22.

F. Code of Conduct The Board shall lay down a code of conduct for all Board and senior management of the company This Code of Conduct shall be posted on the website of the Company All Board and senior management personnel shall affirm compliance with the code on an annual basis. The Annual Report of the company shall contain a declaration to this effect signed by the CEO. The Code of Conduct shall suitably incorporate the duties of Independent Directors as laid down in the Companies Act, 2013. An independent director shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently with respect of the provisions contained in the Listing Agreement.

Same

Same Same

No such provision

No such provision

G. Whistle blower Policy 23

i) The company shall establish a vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the company‘s code of conduct or ethics policy. ii) This mechanism should also provide for adequate safeguards against victimization of director(s) / employee(s) who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases

The Whistle Blower Policy as a mechanism for employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the company‘s code of conduct or ethics policy was not mandatory.

iii) The details of establishment of such mechanism shall be disclosed by the company on its website and in the Board‘s report. III. Audit Committee A. Constitution & Independence of Audit Committee 1. 2.

3.

Audit Committee shall have minimum three Directors as 2/3rd of the shall be Independent Directors. B. ’ Qualification

Same

All of the Audit Committee shall be financially literate

Same

Same

4.

5. 6.

At least 01 member shall have ing or related financial management expertise

Same

C. Chairman of the Audit Committee Chairman of the Audit Committee shall be an Independent Director Chairman shall be present at AGM to answer shareholders‘ queries

Same Same

D. Meeting of Audit Committee 7. 8.

9.

10.

Audit Committee should meet at least four times in a year Not more than four months shall elapse between two meetings E. Quorum Quorum shall be either two or 1/3rd of the , whichever is greater

Same

A minimum of two Independent should be present at every meeting

Same

Same

Same

directors

F. Role & Powers of the Audit Committee 11.

The role of Audit Committee shall include but not restricted to: (briefly)  Oversight of company‘s financial reporting process  Ensuring the credibility, sufficiency and correctness of financial information  Recommending to Board appointment, removal, etc. of statutory auditors and fixation of audit fees, and payment for other services.  Reviewing with management, quarterly/annual financial statements etc. before submission to the Board for approval  Reviewing Internal control structure including the Internal Audit function in all aspects  Scrutiny of inter corporate loans and investments  Valuation of undertakings or assets of the company  Evaluation of internal financial controls and risk management systems

Same

No such Provision No such Provision No such provision

12.

13.

The powers of Audit Committee includes: (briefly)  Investigating any activity within its of reference  Seeking information from any employee  Obtaining outside legal or other professional advice  Securing attendance of outsiders with relevant expertise, if it considers necessary

Same

G. Review of Information by Audit Committee Following information shall mandatorily be reviewed by Audit Committee (briefly) Same  Management Discussion & Analysis of financial conditions and results of operations  Statement of significant Related Party Transactions  Management letters/letters of internal control weaknesses issued by the Statutory Auditors  Internal Audit Reports  Appointment, removal and of remuneration of the Chief Internal Auditor H. Miscellaneous provisions

S.No 14.

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16.

New Clause 49 applicable from 1/10/2014 Old Clause 49 Audit Committee may invite such of the Same executives as it considers appropriate to be present at its meetings including the Finance Director, Head of Internal Audit & a representative of the Statutory Auditor Company Secretary shall act as the Secretary to Same the Committee I. Nomination And Remuneration Committee The company t h r o u g h its Board of No such provision D i r e c t o r s shall set up a nomination and remuneration committee which shall comprise at least three directors, all of whom shall be non-executive directors and at least half shall be independent. Chairman of the committee shall be an independent director. Provided that the chairperson of the company (whether executive or non-executive) may be appointed as a member of the nomination and remuneration committee but shall not chair such committee.

IV. Subsidiary Company A. Applicability 1.

Subsidiary shall be considered as material if the investment of the company in the subsidiary exceeds 20% of its consolidated net worth / 20% of the consolidated income as per the audited balance sheet of the previous financial year.

Material non-listed Subsidiary means where Turnover/net-worth (Paid-up capital + Free reserves) of the subsidiary exceeds 20% of the consolidated turnover/networth respectively of listed holding company and its subsidiaries in the immediately preceding ing year

B. Other provisions 2.

At least one independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of a material non-listed Indian subsidiary company. Audit Committee of the listed holding company shall also review the financial statements, in particular, the investments made by the unlisted subsidiary company

Same

4.

Minutes of the Board meeting of the unlisted subsidiary company shall be placed at the Board meeting of the listed holding company

Same

5.

The management should periodically bring to the attention of the Board of Directors of the listed holding company, a statement of all significant transactions* and arrangements entered into by the unlisted subsidiary company.

Same

3.

Same

S.No 6.

New Clause 49 applicable from 1/10/2014 Old Clause 49 The company shall formulate a policy for No such provision 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. 7. No company shall dispose of shares in its material No such provision 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 ing 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. 8 Selling, disposing and leasing of assets amounting No such provision to more than twenty percent 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 sale/disposal/lease is made under a scheme of Arrangement duly approved by a Court/Tribunal. Significant transaction or arrangement shall mean any individual transaction or arrangement that exceeds/likely to exceed 10% of the total revenues/expenses or total assets/liabilities of ―material unlisted subsidiary company‖ in the immediately preceding ing year. The term ―material non listed Indian subsidiary‖ shall mean an unlisted subsidiary, incorporated in India, whose income or net worth (i.e. paid up capital and free reserves) exceeds twenty percent { 20% } of the consolidated income or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding ing year

V. Risk Management 1

i)

ii) iii)

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. The majority of committee shall consist of of the board of Directors. Senior Executives of the company may be of the said Committee but the chairman of the committee shall be a member of the Board of Directors.

No such provision

2

The company shall lay down procedures to inform Board about the risk assessment and minimization procedures. The Board shall be responsible for framing, implementing and monitoring the risk management plan for the company.

The company shall lay down procedures to inform Board about the risk assessment and minimization procedures. These procedures shall be periodically reviewed to ensure that executive management controls risk through means of a properly defined framework.

VI. Disclosures A. Related Party Transactions 1.

Definition of Related Party ; For the purpose of Clause 49 (VII), an entity shall be considered as related to the company if: (i) such entity is a related party under Section 2(76) of the Companies Act, 2013; or (ii) such entity is a related party under the applicable ing standards." All Related Party Transactions shall require prior approval of the Audit Committee. However, the Audit Committee may grant omnibus approval for Related Party Transactions proposal to be entered into by the company subject to the following conditions a. The Audit Committee shall lay down the criteria for granting the omnibus approval in line with the policy on Related Party Transactions of the company and such approval shall be applicable in respect of transactions which are repetitive in nature. b. The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of the company; 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; Provided that where the need for Related Party Transaction cannot be foreseen and aforesaid details are not available, Audit Committee may grant omnibus approval for such transactions

(i) A statement in summary form of transactions with related parties in the ordinary course of business shall be placed periodically before the audit committee. (ii) Details of material individual transactions with related parties, which are not in the normal course of business, shall be placed before the audit committee. (iii) Details of material individual transactions with related parties or others, which are not on an arm‘s length basis should be placed before the audit committee, together with Management‘s justification for the same.

subject to their value not exceeding Rs.1 crore per transaction. d. Audit Committee shall review, at least on a quarterly basis, the details of RPTs entered into by the company pursuant to each of the omnibus approval given. e. Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year" 2.

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

No such provision

Provided that 1 & 2 shall not be applicable in the following cases: i)

Transactions entered into between two government companies; ii) transactions entered into between a holding company and its wholly owned subsidiary whose s are consolidated with such holding company and placed before the shareholders at the general meeting for approval 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.

3

(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 ten percent {10%} of the annual consolidated turnover of the company as per the last audited financial statements of the company) Details of all material transactions with related parties shall be disclosed quarterly along with the compliance report on corporate governance

No such provision

4.

5.

6.

The company shall disclose the policy on dealing with Related Party Transactions on its website and a web link thereto shall be provided in the Annual report.

No such provision

The company shall formulate a Policy on materiality of related party transactions and also dealing with related party transactions. B. Disclosure of ing Treatment Where in the preparation of financial statements, a treatment different from that prescribed in an ing Standard has been followed, the fact shall be disclosed in the financial statements, together with the management‘s explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction in the Corporate Governance Report. C. Proceeds from Public Issue, etc Where money is raised through an issue (public, rights, preferential, etc) then it shall disclose to the Audit Committee :-

Same

 

7.

8.

uses/applications of funds in major categories on a quarterly basis as a part of quarterly declaration of financial results  and on annual basis in a statement form of funds utilized for purposes other than those stated in the prospectus/offer document (till such time that the full money so raised has been fully spent) (statement to be certified by the Statutory Auditors of the company D. Remuneration of Directors Annual Report of the Company shall contain : pecuniary relationship/ transactions of the nonexecutive directors vis-à-vis the company  all elements of remuneration package of individual directors  details of fixed components & performance linked incentives, service contracts, notice period, stock option details, etc  criteria of making payments to non-executive directors  number of shares & convertible instruments held by non-executive directors Non-executive directors must disclose their shareholding in the listed company in which they are proposed to be appointed as director. These details must also be disclosed in the notice of general meeting called for such appointment.

Same

Same

Same

9. 10.

E. Management Management Discussion & Analysis Report should form part of the Annual Report of the Company Senior Management* to disclose to the Board:  all material financial & commercial transactions  where they have personal interests  that may have potential conflict with the interest of the company

Same Same

* Senior management shall exclude the Board of Directors but includes the personnel of the company who are of its core management team and all of management one level below the executive directors including all functional heads.

F. Shareholders 11.

12.

13.

14.

1.

In case of the appointment/re-appointment of a new director following information is to be provided to the shareholders:  brief resume of the director  nature of his expertise  other directorships  shareholdings (in case of non-executive directors) Quarterly results and presentations made by the company to analysts shall be put on company‘s web-site, or shall be sent in such a form so as to enable the stock exchange on which the company is listed to put it on its own web-site.

Same

Same

A committee under the Chairmanship of a non- A board committee under the executive director and such other as may chairmanship of a non-executive be decided by the Board of the company shall be director shall be formed to formed to specifically look into the redressal of specifically look into the redressal grievances of shareholders, debenture holders and of shareholder and investors other security holders. This complaints like transfer of shares, Committee shall be designated as ‗Stakeholders non-receipt of balance sheet, Relationship Committee‘ and shall consider and non-receipt of declared dividends resolve the grievances of the security holders of the etc. This Committee Shall be company including complaints related to transfer of designated as shares, non-receipt of balance sheet, non-receipt of ‗Shareholders/Investors declared dividends. Grievance Committee‘. To expedite the process of share transfers, the Same Board of the company shall delegate the power of share transfer to an officer or a committee or to the registrar and share transfer agents. The delegated authority shall attend to share transfer formalities at least once in a fortnight. VII. CEO/CFO Certification CEO or the managing Director or manager or in their absence, a whole time Director appointed in

Same

of Companies Act, 2013 and the CFO shall certify to Board:- (briefly) a) There is no material untrue statement in financial statements. b) True and fair view of affairs and compliance with ing Standards/applicable laws are presented in financial statements. c) No transactions are fraudulent/illegal/violate Code of Conduct. d) Accept responsibility for internal control for financial reporting. e) Indicate to Auditors/Audit Committee significant charges in internal control / ing policies, instances of significant fraud involving management/employee etc. VIII. Report on Corporate Governance 1.

2.

3.

1.

2.

There shall be a separate section on Corporate Governance in the Annual Reports of company, with a detailed compliance report on Corporate Governance. Non-compliance of any mandatory requirement of this clause with reasons thereof and the extent to which the non-mandatory requirements have been adopted should be specifically highlighted. The companies shall submit a quarterly compliance report to the stock exchanges within 15 days from the close of quarter as per the format given. The report shall be signed either by the Compliance Officer or the Chief Executive Officer of the company. IX. Compliance The Company shall obtain a certificate from  The Auditors or  Practicing Company Secretary regarding compliance of conditions of Corporate Governance. The aforesaid certificate is to be annexed with the Directors‘ Report which is sent annually to all the shareholders and Stock Exchanges

Same

Same

Same

Same

Annexure - I Comparison of Definitions of Independent Directors under Clause 49 of Listing Agreement and Section 149 of Companies Act 2013 and new Clause 49 of Listing Agreement SNO

SECTION 149 OF COMPANIES ACT 2013 An independent director in relation to a company means a director other than a managing director or a whole-time director or a nominee director.

S N O 1

Old CLAUSE 49 OF LISTING AGREEMENT

2

Who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience.

2

No such provision.

Who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;

3

No such provision.

3

The Board of directors of the company shall have an optimum combination of executive and nonexecutive directors with not less than fifty percent of the board of directors comprising of nonexecutive directors

The Board of Directors of the company shall have an optimum combination of executive and nonexecutive directors with at least one woman director and not less than fifty percent of the Board of Directors comprising nonexecutive directors

4

This concept of number of Independent Directors, linking with Chairman, not present.

4

Where the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors.

Where the Chairman of the Board is a nonexecutive director, at least one-third of the Board should comprise independent directors and in case the company does not have a regular nonexecutive Chairman, at least half of the Board should comprise independent directors.

1

Although, in of Section 149(4) of the Companies Act, 2013{Act} every listed public company shall have atleast one-third of the total number of Directors as Independent Directors on the Board (fractions to be rounded off as 1). Following classes of Companies, shall have atleast two Independent Directors { in of the rules

An independent director shall mean a non-executive director of the company.

Provided that where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent directors. Explanation-

For

the

NEW CLAUSE 49 OF LISTING AGREEMENT WEF 1-10-2014 Independent director‘ shall mean a non-executive director, other than a nominee director of the company:

Provided that where the regular non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent

notified}:1. Public Companies having paid up share capital of Rs. 10 Crore or more; or 2. Public Companies having turnover of Rs. 100 Crore /- or more; or 3. Public Companies which have, in aggregate outstanding loans or borrowings or debentures or deposits exceeding Rs. 50 Crore or more

purpose of the expression ―related to any promoter‖ referred to in sub-section (ii): a.) If the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be related to it; b.) If the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.

directors.

Explanation: For the purpose of the expression ―related to any promoter‖ referred to in sub-clause (2): i. If the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be related to it; ii. If the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.‖

5

Who is or was not a promoter of the company or its holding, subsidiary or associate company;

5

No such provision except, the provision of nonexecutive Chairman being promoter of the company and consequently at least half of Board to be independent

Who is or was not a promoter of the company or its holding, subsidiary or associate company;

6

Who is not related to promoters or directors in the company, its holding, subsidiary or associate company;

6

He is not related to promoters or persons occupying management positions at the board level or at one level below the board;

Who is not related to promoters or directors in the company, its holding, subsidiary or associate company;

7

Who 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;

7

Apart from receiving director‘s remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the director

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;

8

None of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their

8

No such provision.

None of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or

9

promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year; Who, neither himself nor any of his relatives holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed.

directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

9

He has not been an who, neither himself nor executive of the company any of his relatives — in the immediately preceding three financial ( holds or has held the years; position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;

SNO

SECTION 149 OF COMPANIES ACT 2013

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Old CLAUSE 49 OF LISTING AGREEMENT

NEW CLAUSE 49 OF LISTING AGREEMENT WEF 1-10-2014

10

Who, neither himself 10 nor any of his relatives is or has been an employee or proprietor or a partner, in any of the three financial years i. immediately preceding ii. the financial year in iii. which he is proposed iv. to be appointed, of— v. (A) a firm of auditors or company secretaries in practice or cost auditors of the vi. company or its vii. holding, subsidiary or viii. associate company; or (B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent. or more of the gross turnover of such firm; No such provision. 11

He is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following:

Who, neither himself nor any of his relatives is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of —

1} the statutory audit firm or the internal audit firm that is associated with the company, and

(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or (B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;

11

12

13

Who, neither himself nor any of his relatives holds together with his relatives two per cent. or more of the total voting power of the company. No such provision.

2} the legal firm(s) and consulting firm(s) that have a material association with the company.

He is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director;

Who, neither himself nor any of his relatives is a material supplier, service provider or customer or a lessor or lessee of the company

12

He is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares.

Who, neither himself nor any of his relatives holds together with his relatives two per cent or more of the total voting power of the company;

13

He is not less than 21 years of age

He is not less than 21 years of age

SN O 14

SECTION 149 OF COMPANIES ACT 2013 No such provision.

SN O 14

Old CLAUSE 49 OF LISTING AGREEMENT

NEW CLAUSE 49 OF LISTING AGREEMENT WEF 1-10-2014 Explanation Explanation a. Associate shall mean ai. i. ―Associate" shall company which is an mean a company ―associate‖ as defined in which is an ing Standard ―associate‖ as defined (AS) 23, ―ing for in ing Investments in Standard (AS) 23, Associates in ―ing for Consolidated Financial Investments in Statements‖, issued by Associates in the Institute of Consolidated Chartered ants Financial of India. Statements‖, issued by the Institute of Chartered b. ―Senior management‖ ants of India. shall mean personnel of the company who are of its ii. ―Key Managerial core management Personnel" shall mean team excluding Board ―Key Managerial of Directors. Normally, Personnel‖ as defined in this would comprise all section 2(51) of the of Companies Act, 2013. management one level below the executive directors, including all functional heads. c. ―Relative‖ shall mean ―relative‖ as defined in section 2(41) and section 6 read with Schedule IA of the Companies Act, 1956. d. Nominee directors iii. ―Relative‖ shall appointed by an mean ―relative‖ as institution which has defined in section 2(77) invested in or lent to of the Companies Act, the company shall be 2013 and rules deemed to be prescribed there under. independent directors. Explanation: ―Institution‘ for this purpose means a public financial institution as defined in Section 4A of the Companies Act, 1956 or a ―corresponding new bank‖ as defined in section 2(d) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 [both Acts].‖

SN O 15

16

SECTION 149 OF COMPANIES ACT 2013 Who, neither himself nor any of his relatives is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twentyfive per cent. or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. or more of the total voting power of the company; or

SN O

Old CLAUSE 49 OF LISTING AGREEMENT

15

No such provision.

Who possesses such other qualifications as may be prescribed.

16

No such provision.

NEW CLAUSE 49 OF LISTING AGREEMENT WEF 1-10-2014 Who, neither himself nor any of his relatives is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; No such provision

Annexure-II CORPORATE GOVERNANCE (Compliance report in respect of the minimum information to be placed before the Board in of Clause 49 of the Listing Agreement) Sl. No. 1 2 3 4 5

6 7 8

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10 11 12

13 14

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New Clause 49 Old Clause 49 Applicable from 1/10/2014 Information to be placed before the Board Annual operating plans and budgets and any updates. Same Capital budgets and any updates. Same Quarterly results for the Company and its operating Same divisions or business segments. Minutes of meetings of Audit Committee and other Same Committees of the Board. The information on recruitment and remuneration of Same senior officers just below the board level, including appointment or removal of Chief Financial Officer and the Company Secretary. Show cause, demand, prosecution notices and penalty Same notices, which are materially important. Fatal or serious accidents, dangerous occurrences, any Same material effluent or pollution problems. Any material default in financial obligations to and by Same the company, or substantial nonpayment for goods sold by the company. Any issue, which involves possible public or product Same liability claims of substantial nature, including any judgement or order which, may have ed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can have negative implications on the company. Details of any t venture or collaboration agreement. Same Transactions that involve substantial payment towards Same goodwill, brand equity, or intellectual property. Significant labour problems and their proposed Same solutions. Any significant development in Human Resources/ Industrial Relations front like g of wage agreement, implementation of Voluntary Retirement Scheme etc. Sale of material nature, of investments, subsidiaries, Same assets, which is not in normal course of business. Quarterly details of foreign exchange exposures and Same the steps taken by management to limit the risks of adverse exchange rate movement, if material. Non-compliance of any regulatory, statutory or listing Same requirements and shareholders service such as nonpayment of dividend, delay in share transfer etc.

Annexure-III SUGGESTED LIST OF ITEMS TO BE INCLUDED IN THE REPORT ON CORPORATE GOVERNANCE IN THE ANNUAL REPORT OF COMPANIES Sl. No. 1 2

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4

New Clause 49 Applicable from 1/10/2014 A brief statement on company‘s philosophy on code of governance. Board of Directors: a. Composition and category of directors, for example, promoter, executive, nonexecutive, independent non-executive, nominee director, which institution represented as lender or as equity investor. b. Attendance of each director at the Board meetings and the last AGM. c. Number of other Boards or Board Committees in which he/she is a member or Chairperson. d. Number of Board meetings held, dates on which held. Audit Committee: a. Brief description of of reference b. Composition, name of and Chairperson c. Meetings and attendance during the year Nomination and Remuneration Committee: a. Brief description of of reference b. Composition, name of and Chairperson c. Attendance during the year d. Remuneration policy e. Details of remuneration to all the directors, as per format in main report.

5

Stakeholders' Grievance Committee: a. Name of non-executive director heading the committee b. Name and designation of compliance officer c. Number of shareholders‘ complaints received so far d. Number not solved to the satisfaction of shareholders e. Number of pending complaints

6

General Body meetings: a. Location and time, where last three AGMs held. b. Whether any special resolutions ed in the previous 3 AGMs c. Whether any special resolution ed last year through postal ballot – details of voting pattern d. Person who conducted the postal ballot exercise e. Whether any special resolution is proposed

Old Clause 49 No Change No Change

No Change

Remuneration Committee: a. Brief description of of reference b. Composition, name of and Chairperson c. Attendance during the year d. Remuneration policy e. Details of remuneration to all the directors, as per format in main report. Shareholders Committee: a. Name of non-executive director heading the committee b. Name and designation of compliance officer c. Number of shareholders‘ complaints received so far d. Number not solved to the satisfaction of shareholders e. Number of pending complaints No change

Sl. No. 7

8

9

to be conducted through postal ballot f. Procedure for postal ballot New Clause 49 Applicable from 1/10/2014

Old Clause 49

Disclosures: a. Disclosures on materially significant related party transactions that may have potential conflict with the interests of company at large. b. Details of non-compliance by the company, penalties, strictures imposed on the company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years. c. Whistle Blower policy and affirmation that no personnel has been denied access to the audit committee. d. Details of compliance with mandatory requirements and adoption of the nonmandatory requirements of this clause Means of communication: a. Quarterly results b. Newspapers wherein results normally published c. Any website, where displayed d. Whether it also displays official news releases; and e. The presentations made to institutional investors or to the General Shareholder information: a. AGM: Date, time and venue b. Financial year c. Date of Book closure d. Dividend Payment Date e. Listing on Stock Exchanges f. Stock Code g. Market Price Data: High., Low during each month in last financial year h. Performance in comparison to broadbased indices such as BSE Sensex, CRISIL index etc. i. Registrar and Transfer Agents j. Share Transfer System k. Distribution of shareholding l. Dematerialization of shares and liquidity m. Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity n. Plant Locations o. Address for correspondence

No Change

No Change

No Change

Sl. No. 1

2

NON-MANDATORY REQUIREMENTS New Clause 49 Old Clause 49 Applicable from 1/10/2014 The Board The Board The Board - A non-executive Chairman may A non-executive Chairman may be entitled be entitled to maintain a Chairman's office to maintain a Chairman‘s office at the at the company's expense and also allowed company‘s expense and also allowed reimbursement of expenses incurred in reimbursement of expenses incurred in performance of his duties. performance of his duties. Independent Directors may have a tenure not exceeding, in the aggregate, a period of nine years, on the Board of a company. The company may ensure that the person who is being appointed as an independent director has the requisite qualifications and experience which would be of use to the company and which, in the opinion of the company, would enable him to contribute effectively to the company in his capacity as an independent director.‖ No such provision Remuneration Committee i.

ii.

iii. iv.

3

Shareholder Rights A half-yearly declaration of financial performance including summary of the significant events in last six-months, may be sent to each household of shareholders.

The board may set up a remuneration committee to determine on their behalf and on behalf of the shareholders with agreed of reference, the company‘s policy on specific remuneration packages for executive directors including pension rights and any compensation payment. To avoid conflicts of interest, the remuneration committee, which would determine the remuneration packages of the executive directors may comprise of at least three directors, all of whom should be non-executive directors, the Chairman of committee being an independent director. All the of the remuneration committee could be present at the meeting. The Chairman of the remuneration committee could be present at the Annual General Meeting, to answer the shareholder queries. However, it would be up to the Chairman to decide who should answer the queries. No Change

4

Sl. No. 5

Audit qualifications Company may move towards a regime of unqualified financial statements. New Clause 49 Applicable from 1/10/2014 No such provision

6

No such provision

7

No such provision

8

Separate posts of Chairman and CEO The company may appoint separate persons to the post of Chairman and Managing Director/CEO. Reporting of Internal Auditor The Internal auditor may report directly to the Audit Committee. The company will mandatorily comply with all the ing Standards issued by Institute of Chartered ants of India (ICAI) from time to time.‖

9

10

No Change

Old Clause 49 Training of Board A company may train its Board in the business model of the company as well as the risk profile of the business parameters of the company, their responsibilities as directors, and the best ways to discharge them. Mechanism for evaluating nonexecutive Board The performance evaluation of nonexecutive directors could be done by a peer group comprising the entire Board of Directors, excluding the director being evaluated; and Peer Group evaluation could be the mechanism to determine whether to extend /continue the of appointment of non-executive directors. Whistle Blower Policy The company may establish a mechanism for employees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the company‘s code of conduct or ethics policy. This mechanism could also provide for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit committee in exceptional cases. Once established, the existence of the mechanism may be appropriately communicated within the organization. No such provision

No such provision

No Change

Sl. No. 11

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New Clause 49 Applicable from 1/10/2014 Corporate Filing and Dissemination System (CFDS), viz., www.corpfiling.co.in (1) The company agrees (a) to file on the CDFS, such information, statements and reports as may be specified by the Participating Stock Exchanges in this regard. (b) that the Compliance Officer, appointed under clause 47(a) and the company shall be responsible for ensuring the correctness, authenticity and comprehensiveness of the information, statements and reports filed under this clause and also for ensuring that such information is in conformity with the applicable laws and the listing agreement. (c) to ensure that the electronic filing of information through CFDS, pursuant to compliance with any clause of the listing agreement, shall be done within the time limit specified in the respective clause of the listing agreement. (d) to put in place such infrastructure as may be required to comply with the clause. Explanation: For the purposes of this clause – (i) The term ―Corporate Filing and Dissemination System (CFDS)‖ shall mean the portal at the URL www.corpfiling.co.in or such other website as may be specified by the participating stock exchanges from time to time to take care of exigencies, if any. (ii) The term ―Participating Stock Exchanges‖ shall mean the stock exchanges owning and maintaining CFDS. The company agrees to notify the stock exchange and also disseminate through its own website, immediately upon entering into agreements with media companies and/or their associates, the following information:a. Disclosures regarding the shareholding (if any) of such media companies/associates in the company. b. Any other disclosures related to such agreements, viz., details of nominee of the media companies on the Board of the company, any management control or potential conflict of interest arising out of such agreements, etc. c. Disclosures regarding any other back to back treaties/contracts/agreements/MoUs or similar instruments entered into by the company with media companies and/or their associates for the purpose of advertising, publicity, etc.

Old Clause 49 No Change

No Change

Sl. No. 13

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New Clause 49 Applicable from 1/10/2014 The issuer company agrees to maintain a functional website containing basic information about the company e.g. details of its business, financial information, shareholding pattern, compliance with corporate governance, information of the designated officials of the company who are responsible for assisting and handling investor grievances, details of agreements entered into with the media companies and/or their associates, etc. The company also agrees to ensure that the contents of the said website are updated at any given point of time.‖ Listed entities shall submit, as part of their Annual Reports, Business Responsibility Reports, describing the initiatives taken by them from an environmental, social and governance perspective, in the format suggested as under.

Date:- 17th October 2014

Old Clause 49 No Change

No Change