With the aim to encourage companies to adopt best practices on corporate governance the Security and Exchange Borad of India (SEBI) came out with detailed corporate governance norms for listed companies. The guidelines provide for stricter disclosures and protection of investor rights, including equitable treatment for minority and foreign shareholders.
The norms issued by SEBI are aligned with the new the Companies Act.
Finer points of the guidelines are:
• The new rules would be effective from October 1.
• Companies are required to get shareholders' approval for related party transactions, establish whistle blower mechanism, elaborate disclosures on pay packages and have at least a woman director on their boards.
• The maximum number of boards an independent director can serve on listed companies be restricted to 7, while the directorship would be capped at three if the person is serving as a whole time director in any listed company.
• SEBI has amended clauses -- 35B and 49 -- of the listing agreement. Now, under changed 35B norms, listed companies are required to provide the option of facility of e-voting to shareholders on all resolutions proposed to be passed at general meetings.
• Under clause 49, pertaining to corporate governance, listed entities have to get shareholders' nod for related party transactions.
• Apart from providing adequate and timely information to all shareholders, listed companies should also facilitate the exercise of voting rights by foreign shareholders.
• It provides for expanded role of audit committee and enhanced disclosure of remuneration policies.
The norms issued by SEBI are aligned with the new the Companies Act.
Finer points of the guidelines are:
• The new rules would be effective from October 1.
• Companies are required to get shareholders' approval for related party transactions, establish whistle blower mechanism, elaborate disclosures on pay packages and have at least a woman director on their boards.
• The maximum number of boards an independent director can serve on listed companies be restricted to 7, while the directorship would be capped at three if the person is serving as a whole time director in any listed company.
• SEBI has amended clauses -- 35B and 49 -- of the listing agreement. Now, under changed 35B norms, listed companies are required to provide the option of facility of e-voting to shareholders on all resolutions proposed to be passed at general meetings.
• Under clause 49, pertaining to corporate governance, listed entities have to get shareholders' nod for related party transactions.
• Apart from providing adequate and timely information to all shareholders, listed companies should also facilitate the exercise of voting rights by foreign shareholders.
• It provides for expanded role of audit committee and enhanced disclosure of remuneration policies.
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