Clause 49

Clause 49

Clause 49 and Composition of Board of Directors

Not less than fifty percent of the strength of the Board of Directors should comprise of non-executive directors. If the Chairman of the company is a non-executive chairman, not less than one-third of the strength of the Board should comprise of independent directors and if he is an executive chairman, not less than half of the Board should comprise of independent directors. If 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 should consist of independent directors.

Clause 49 and Disclosure in Annual Report

— To disclose all pecuniary relationship or transactions of the non-executive directors vis-a-vis the company.

— To disclose particulars of every aspect of remuneration package to directors including service contracts, notice period, severance fees, and stock option details, if any.

— To include a Management Discussion and Analysis Report as part of the directors’ report or as an addition thereto.

— To disclose ail material financial and commercial transactions in which directors have personal interest, which may have a potential conflict with the interest of the company.

— To disclose details of persons who are proposed to be appointed or re-appointed as directors.

— To include a separate section on Corporate Governance with a detailed compliance report on Corporate Governance and to give reasons for any non-compliance of mandatory requirements.

Clause 49 and Audit Committee

— It should have a minimum of three non-executive directors, a majority of them being independent, and with at least one director having financial and accounting knowledge. The chairman of the committee shall be an independent director.

— The chairman shall be present at Annual General Meeting to answer shareholder queries.

— The finance director, head of internal audit and when required, a representative of the external auditor shall be present as invitees for the meetings of the audit committee.

— The Company Secretary shall act as the secretary to the committee. The audit committee shall meet at least four times in a year.

— One meeting shall be held before finalisation of annual accounts and one every six months.

— The quorum shall be either two members or one third of the members of the audit committee, whichever is higher and minimum of two independent directors.

Clause 49 and Role of Audit Committee

The role of the audit committee shall include the following :

1. To ensure that the financial statement is correct, sufficient and credible.

2. Recommending the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered.

4. Reviewing, with the management -

— the annual financial statements and the quarterly financial statements before submission to the board for approval.

— the statement of uses / application of funds raised through an issue, the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notices and the report submitted by the monitoring agency on utilisation of proceeds of a public or rights issue.

— performance of statutory and internal auditors, adequacy of the internal control systems.

— the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

— the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.

5. Discussion with internal auditors any significant findings and also with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

6. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors.

7. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

8. Approval of appointment of CFO after assessing the qualifications, experience & background, etc. of the candidate.

9. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

Clause 49 and Committees of Directors

— A director shall not be a member in more than 10 committees or act as Chairman of more than five committees across all companies in which he is a director.

— He should inform the company about the committee positions he occupies in other companies and notify changes as and when they take place.

— For the above only public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under Section 25 of the Companies Act shall be excluded. Only the three committees viz. the Audit Committee, the Shareholders’ Grievance Committee and the Remuneration Committee should be counted.

Clause 49 and shareholders grievance committee

It should be under the chairmanship of a non-executive director to look into the redressal of complaints relating to matters such as transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends.

Clause 49 and share transfers

To expedite share transfers by delegating the power of share transfer to an officer or a committee or to the registrar and share transfer agents who shall attend to share transfer formalities at least once in a fortnight.

Clause 49 and Compliance Certificate

— To obtain a certificate from the practicing Company Secretaries/auditors of the company regarding compliance of conditions of corporate governance.

— To annex the certificate with the directors’ report.

— To send the same to the Stock Exchanges along with the annual returns filed by the company.