Stock Market regulator, Securities & Exchange Board of India(SEBI) has introduced certain amendments to the revised clause 49,vide circular dated 15th September, 2014, which is to be made effective from 1st October, 2014 onwards. The gist of the same has been produced hereinbelow :
1) Non- applicability of clause 49 on companies having equity share capital upto INR 10 crores and Net worth upto INR 25 crores, as on the last day of the previous financial year;
2) The provisions regarding appointment of women director shall be effective from 1st Apr'15;
3) Maximum tenure of independent directors shall be in accordance with companies act'13( and clarifications made thereunder) as against the existing tenure of 5 years;
4) A transaction with the related party shall be construed to include single transaction or a group of transactions in a contract;
5) Definition of related party amended to bring the same at par with the companies act [Section 2(76)] and applicable accounting standards[ AS -18, 21,23,27, etc. ]
6) For materiality concept, limit of 5% has been enhanced to 10%;
7) related party transactions between two govt companies, or between a holding and its wholly owned subsy, don't require any approval of audit committee. These also not require any approval of shareholders as against special resolution required earlier;
8) Following disclosures stand deleted:
------resignation of directors
------formal letter of appointment
------details of training imparted to Independent Directors
------the remuneration policy and the evaluation criteria in its Annual report
9) Earlier certification was required by MD/Manager and Whole time Finance Director/CFO. Now, the same has been replaced as follows--
CEO or MD or Manager....or in their absence, a Whole time Finance Director.....and the CFO
10) Disclosure of the web link of the policy on dealing with Related Party Transactions to be provided in the Annual Report
[Source- Circular dated 15th Sep'14]
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1410777212906.pdf
For erstwhile clause 49, please refer following link:
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1397734478112.pdf
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