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C
lause 49 of the Listing
executive directors
Agreement, which deals
● Mandatory training of non-exec-
with Corporate Gover-
utive directors, etc.
nance norms that a listed entity
The changes in corporate gov-
should follow, was first introduced
ernance norm as prescribed in the
in the financial year 2000-01 based
revised Clause 49 are as follows:
on recommendations of Kumar
Mangalam Birla committee. After
these recommendations were in
A. Composition of Board
The revised clause prescribes
place for about two years, SEBI, in
six tests, which a non-executive
order to evaluate the adequacy of
director needs to pass to qualify as
the existing practices and to further
an Independent Director. The exist-
improve the existing practices set
ing requirement is that to qualify as
up a committee under the
an Independent Director, the direc-
Chairmanship of Mr Narayana
tor should not have, apart from
Murthy during 2002-03. The
Agreement based on Murthy com- receiving director’s remuneration,
Murthy committee, after holding
mittee recommendations. This led any other material pecuniary rela-
three meetings, had submitted the
to widespread protests and repre- tionship or transactions with the
draft recommendations on corpo-
sentations from the Industry company, its promoters, its man-
rate governance norms. After
thereby forcing the Murthy com- agement or its subsidiaries, which
deliberations, SEBI accepted the
mittee to meet again to consider the in the judgment of the Board may
recommendations in August 2003
objections. affect independence of judgment of
and asked the Stock Exchanges to
The committee, thereafter, the director. This requirement finds
revise Clause 49 of the Listing
considerably revised the earlier place in the revised clause also
The author is Vice President, Tata Tea Ltd. He can be reached at dilip.sen@tatatea.co.in
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F. Disclosures
T
m e
Following
de s ly y
new disclosure
requirements
have been specified
dent in the revised clause 49:
director (i) Statement on transactions
on the Board with related parties
of the holding company shall in the ordinary
be a director on the board of a course of busi-
material non-listed Indian sub- have not ness shall be
sidiary company; been used. placed before the Audit
(ii) The audit committee of the hold- It can there- committee periodically;
ing company shall review the fore be interpreted that board (ii) Details of material individual
financial statements, in particu- meeting minutes, financial transactions with related par-
lar, the investments made by the statements and significant ties which are not in the normal
unlisted subsidiary company; transactions of all unlisted sub- course of business shall be
(iii) The minutes of board meetings sidiaries whether incorporated placed before the Audit com-
of the unlisted subsidiary com- in India or abroad are to be mittee; and
pany shall be placed at the placed before the board of the (iii) Details of material individual
board meeting of the holding holding company or to be transactions with related par-
company. The management reviewed by the audit commit- ties or others, which are not on
should periodically bring to the tee of the holding company. Is arm’s length basis should be
attention of the holding com- this the intention? placed before Audit committee
pany a statement of all signifi- (b) Material non-listed Indian sub- together with management’s
cant transactions and arrange- sidiary shall mean an unlisted justification for the same.
ments entered into by the subsidiary, incorporated in Here also, the word ‘material’
unlisted subsidiary company. India, whose turnover or net has not been defined. Listed
Attention of the readers is worth exceeds 20% of the con- companies should ascertain
O ne of the highly revered Chartered Accountants and a leading light of the profession, ICAI’s for-
mer-president Shri Shantanu Nanubhai Desai passed away on 10th November 2004 in Mumbai.
Born on 26th January 1925, he became a member of our Institute in 1949 and rose to become
one of the pillars of the profession. Having become President of ICAI in 1961-62 at a young
age of 35, he had served as a Central Council member for decades.
He was actively associated with Indian Merchants Chamber as its Managing Committee member for a long
period of 32 years. He became its President in 1976. He had held several distinguished positions in his illustrious
professional life, including as Member of the High Powered Sachar Committee on Company Law & MRTP
Reforms, as Chairman/ Director of several reputed public companies besides as a member of ASSOCHAM.
Mr. Desai was also the founder member of the Bombay Chartered Accountants Society. A Rotarian of repute
and a veteran of several Committees, Mr. Desai was a free, frank and modest personality— a thorough gen-
tleman who endeared one and all with his qualities of both head and heart.
Mr. Desai’s services to the cause of our profession and his long career of more than 50 years as one of our pro-
fession’s most distinguished ambassadors will long be remembered and will continue to inspire new generation
of Chartered Accountants.