Issues under clause 49 and proposed amendments
SEBI had constituted a Committee on Corporate Governance under the Chairmanship of Shri N. R. Narayana Murthy. Based on the recommendations of the Committee and public comments received, certain amendments were made in Clause 49 of the Listing Agreement, vide circular dated August 26, 2003.
SEBI convened another meeting of the Narayana Murthy committee on Corporate Governance be convened on November 17, 2003 for deliberating the suggestions and representations received after the issuance of the aforesaid circular.
The committee has since submitted its report to SEBI. The report proposes certain amendments in the revised clause 49 which was issued vide circular dated 26th August 2003. The report is reproduced below for seeking public comments.
Definition of independent director (Issue 1)
Existing language - Explanation (i)(e) to clause I.A
For the purpose of this clause, the expression 'independent director' shall mean non-executive director of the company who:
a. apart from receiving director's remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its senior management or its holding company, its subsidiaries and associated companies;
b. is not related to promoters or management at the board level or at one level below the board;
c. has not been an executive of the company in the immediately preceding three financial years;
d. is not a partner or an executive of the statutory audit firm or the internal audit firm that is associated with the company, and has not been a partner or an executive of any such firm for the last three years. This will also apply to legal firm(s) and consulting firm(s) that have a material association with the entity.
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