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SEBI Amends Clause 49 Corporate Governance Requirements

Published on Thu, Sep 18,2014 | 13:42, Updated at Thu, Sep 18 at 13:42Source : 

For listed companies, Securities and Exchange Board of India (SEBI) prescribes corporate governance framework by directing stock exchanges to include a model clause (Clause 49) in listing agreements.  Accordingly, listed companies were required to follow governance requirements both under Clause 49 as also under the general company law.

The Companies Act, 2013 (Co Act), on its coming into effect, introduced new requirements for corporate governance applicable to all companies.  To align the requirements of Co Act, and Clause 49, SEBI issued circular CIR/CFD/POLICY CELL/2/ 2014 dated April 17, 2014 (Principal Circular), the requirements of which were mandatory for all listed companies with effect from October 1, 2014.

Since the issue of the Principal Circular, the Ministry of Corporate Affairs (MCA) issued certain clarifications/ circulars/ notifications as regards corporate governance.  Also, SEBI has received feedback from market participants on the new requirements prescribed in the Principal Circular.  In order to align the corporate governance framework as prescribed in the Principal Circular with subsequent MCA clarifications, and also, to provide procedural relief in certain cases, SEBI issued circular CIR/CFD/POLICY CELL/7/ 2014 dated September 15, 2014 (Amending Circular) to provide amendments to the Principal Circular.  This update by BMR Advisors discusses some of the important changes introduced by the Amending Circular. It may be noted that listed companies would still need to comply with the revised corporate governance framework with effect from October 1, 2014.

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Attachments : BMR_Edge_M_A_Tax_Vol_9_Issue_9-1.pdf

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