Here are the highlights of the provisions of section 49: Board of Directors of the Corporation The clause defines an independent director as a non-executive director of the Company which: In 2014, section 49 was amended to include the Whistleblower Policy as a mandatory provision. As an important step towards the codification of corporate governance standards, SEBI included clause 49 in the listing agreement (2000), which now serves as the standard for corporate governance in India. Section 49 gave rise to the requirement that half of the directors on the board of directors of a publicly traded company must be independent directors. In the same clause, SEBI had proposed the responsibilities of the Audit Committee, which would have a majority of independent directors. Any company that wishes to list its securities on the stock exchange must sign an agreement with it, called a listing agreement. It has 51 articles. These deal with various guidelines on stock exchange listing and the management responsibilities of the company. Article 49, one of the longest, deals with corporate governance. It lists the mandatory and non-mandatory standards that companies must comply with.

The Securities Exchange Board of India (SEBI) included clause 49 in the listing agreement in 2000. The clause was enacted with the aim of improving the corporate governance of all companies listed on Indian stock exchanges, including the NSE and BSE. Section 49 was revised in 2004 to better align it with the Sarbanes-Oxley Act enacted by the U.S. government. (a) for undertakings applying to be listed for the first time, at the time of the application for authorisation in principle for that listing. To comply with subsection 49(1), a company must adhere to some of the following principles. Article 49 of the SEBI Guidelines on Corporate Governance, as amended on 29 October 2004, made significant changes to the definition of “independent directors”, strengthened the responsibilities of audit committees, improved the quality of financial information, including that relating to transactions with related parties and proceeds from public/legal/preferred issuances, and require management bodies to adopt a formal code of conduct. Require certification of financial statements by the CEO and CFO and improve disclosure to shareholders. Some non-mandatory clauses, such as the whistleblower policy and term limits for independent directors, have also been included.

[1] Non-binding clauses include a whistleblower policy and the restriction of independent directors` terms. In 2003, Sebi appointed another group chaired by NR Narayana Murthy to re-examine the issues. Based on the views of this committee and other committees, including the Naresh Chandra Group appointed by the Ministry of Corporate Affairs, Sebi announced in October 2004 its decision to replace Article 49 with a revised article in order to further strengthen corporate governance. First, it asked stock exchanges to ensure that listed companies comply with the new clause by April 1, 2005. It was then extended until 31 December 2005. If we compare this new amended clause with the previous clause of the Companies Act 1956, we will find that this new clause aims to improve transparency and protect the interests of stakeholders, because a new detailed provision of the independent director has been inserted, the role of the audit committee has been improved, etc. The coercion of at least one female director means that the Ministry is working for women`s empowerment. The main reason for this clause is that the company must be fair with its stakeholders. Everything in the company must be done efficiently and fairly. Since stakeholders have a social and financial interest in the company, the company is obliged to protect their interests. To further strengthen the clause and make it more compliant with the Sarbanes Oxley Act, which was introduced in the United States after a series of deficiencies in corporate governance, SEBI created the Narayana Murthy Committee to review the clause and its effectiveness. The Committee also had the task of formulating improvements to the article.

Article 49 was amended by SEBI to incorporate the following amendments proposed by the Committee on 29 October 2004 and entered into force in January 2006: Clause 49 of the Listing Agreement applies to companies wishing to be listed on a stock exchange. This clause contains mandatory and non-mandatory provisions. The main mandatory provisions are as follows: Clause 49 has been included in the listing agreement, which is based on the recommendations of the Kumaramangalam Birla Committee on Corporate Governance appointed by SEBI. The clause initially recommended core corporate governance practices for Indian companies and made significant changes in the areas of governance and disclosure. It made the following requirements binding: “Corporate governance is about maintaining the balance between economic and social objectives as well as between individual and community objectives. The governance framework should promote the efficient use of resources while requiring accountability for the management of these resources. The aim is to reconcile the interests of individuals, businesses and society as much as possible. Sir Adrian Cadbury, United Kingdom, Commission Report: Corporate Governance 1992 The fundamental criterion on which the entire listing agreement is based is corporate governance. Currently, there are 54 clauses in the registration agreement, all based on this concept. In addition, there is a clause that deals specifically with corporate governance, i.e. Article 49. Listing is the admission of securities to trading on a recognized stock exchange. Securities can come from public limited companies, central or state governments, quasi-state and other financial institutions/corporations, municipalities, etc.

The main objectives of the listing are: • to provide liquidity for the securities; • mobilizing savings for economic development; • protect the interests of investors by ensuring full disclosure. A company wishing to list its securities on the stock exchange must submit an application to the stock exchange in the prescribed form before the prospectus is issued by the company, if the securities are issued by means of a prospectus, or before the issuance of an “offer to sell” if the securities are issued by way of an offer to sell. The basic criterion on which the entire listing agreement is based is corporate governance. Currently, there are 54 clauses in the registration agreement, all based on this concept. In addition, there is a clause that deals specifically with corporate governance, i.e. Article 49. Through the listing agreement, the exchange on behalf of SEBI ensures, among other things, that companies adhere to good corporate governance practices. Therefore, the registration agreement is of great importance and is executed under the common seal of a company. Pursuant to the Registration Agreement, the Company is required to make certain disclosures and take certain action, otherwise the Company may expect disciplinary action, including suspension/delisting of securities. A company undertakes, inter alia, to facilitate the rapid transfer, registration, subdivision and consolidation of securities; correctly communicate the closing of transfer books and dates of evidence, transmit copies of annual reports, balance sheets and profit and loss accounts to the exchange, submit quarterly equity samples and financial results; immediately notify the stock exchange of events likely to significantly affect the company`s financial performance and share price, comply with corporate governance conditions, etc. The Stock Exchange`s listing department monitors companies` compliance with the terms of the listing agreement on a quarterly basis, including the timely payment of annual listing fees, the submission of results, participation behaviour and corporate governance reports. A company that intends to list its securities on the BSE must comply with the listing requirements it prescribes.

Some of the requirements are: Ø Minimum requirements for listing new companies Ø Minimum requirements for companies delisted by the BSE and applying for re-listing in the BSE Ø Authorisation to use the name of the BSE in the prospectus of an issuing company Submission of the letter of application Ø Allocation of securities Ø Trading authorisation Ø Guarantee requirement of 1% Ø Payment of listing fees Ø Compliance to the listing agreement Ø Cash Management Services (CMS) – Collection of listing fees Minimum requirements for the listing of new companies – The following eligibility criteria were imposed with effect from 1 August 2006 for the listing of companies on BSE by initial public offering (IPO) and follow-up exchanges (OPOs): the companies were classified as large-cap and small-cap companies. A large-cap company is a company with a minimum issue size of Rs. 10 crore and a market capitalization of at least Rs. 25 crore. A small-cap company is a different company than a large-cap company. In the case of large-cap companies, the minimum capital after the issue of the applicant company (hereinafter referred to as “the company”) is Rs 3 crore; and The minimum output size is 10 crores rupees; and the minimum market capitalization of the company is Rs….