(2) The listed entity which has listed its specified securities shall comply
with the corporate
governance
provisions as specified in
chapter IV which shall be
implemented in a manner so as to achieve the objectives of the
principles
as mentioned below.
(a) The rights of shareholders: The listed entity shall seek to protect and facilitate the exercise of
the following
rights of shareholders:
(i)
right to participate in, and to be sufficiently informed of, decisions concerning fundamental corporate changes.
(ii) opportunity to participate effectively and
vote in general shareholder meetings.
(iii)being informed of the rules, including voting procedures that govern general
shareholder meetings.
(iv)opportunity
to ask questions to the board of directors, to place items on the
agenda
of general meetings, and to propose resolutions, subject to reasonable limitations.
(v) Effective shareholder participation in key corporate governance decisions, such
as the nomination and
election of members
of board of directors.
(vi)exercise of ownership rights by all shareholders, including institutional
investors.
(vii) adequate
mechanism to
address the grievances
of the shareholders.
(viii)
protection of minority
shareholders
from abusive
actions
by,
or
in
the
interest of, controlling shareholders acting either directly
or indirectly, and
effective means of
redress.
(b) Timely information: The listed entity shall provide adequate and timely information to shareholders, including but
not limited to the following:
(i) sufficient and timely information concerning the date, location and agenda of general meetings, as well as full and timely information regarding the issues to
be discussed at the meeting.
(ii) Capital structures and arrangements that enable certain shareholders to obtain a
degree of control
disproportionate to their equity ownership.
(iii) rights attached to all series and classes of shares, which shall be disclosed to investors before they acquire shares.
(c) Equitable
treatment: The listed
entity shall ensure
equitable treatment of all
shareholders, including
minority and foreign
shareholders,
in the following manner:
(i) All shareholders of
the same series of a class shall be treated equally.
(ii) Effective shareholder participation in key corporate governance decisions, such as the nomination and election of
members of board of directors, shall be facilitated.
(iii)Exercise of
voting rights by foreign
shareholders
shall be facilitated.
(iv)The listed entity shall devise a framework to avoid insider trading and abusive
self-dealing.
(v) Processes and procedures for general shareholder meetings shall
allow for equitable
treatment of all shareholders.
(vi)Procedures of listed entity shall not make it unduly difficult or expensive to cast
votes.
(d) Role
of stakeholders in corporate governance: The listed entity
shall recognise the
rights of its stakeholders and encourage co-operation between listed entity and the stakeholders, in the following manner:
(i) The listed entity shall respect the rights of stakeholders that are established by law or through
mutual
agreements.
(ii)
Stakeholders shall have
the
opportunity to obtain effective redress
for violation
of their rights.
(iii)Stakeholders shall have access to relevant, sufficient
and reliable
information on a timely and regular basis to enable them to participate in corporate governance process.
(iv)The listed entity
shall devise an effective whistle blower mechanism enabling stakeholders, including
individual employees and their representative bodies, to freely communicate their
concerns about
illegal or unethical
practices.
Compliance Officer and his
Obligations.
6. (1) A listed
entity shall appoint
a qualified company secretary as the compliance officer.
(2) The compliance officer of the listed entity shall be responsible for-
(a) ensuring
conformity with the regulatory provisions applicable to the listed entity
in letter and spirit.
(b) co-ordination
with and reporting to the Board, recognised stock exchange(s) and
depositories with respect to compliance with rules, regulations
and other directives
of these authorities in manner
as specified
from time to time.
(c) ensuringthat the correct procedures have been followed that would result in the correctness, authenticity and comprehensiveness of the information,
statements and
reports filed by the listed entity under
these regulations.
(d) monitoring email address of grievance redressal division as designated by the listed entity for the purpose
of
registering complaints
by
investors:
Provided that the requirements of this regulation
shall not be applicable in the case of
units issued by mutual funds which
are
listed on recognised stock exchange(s) but
shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
Preservation
of documents.
9. The listed entity shall have a policy for preservation of
documents, approved by its board
of directors, classifying them
in at
least
two categories
as follows- (a) documents whose preservation shall be permanent in
nature ;
(b) documents
with preservation period of not less than eight years after completion of the relevant
transactions:
Provided that the listed entity may keep documents specified
in
clauses
(a)
and
(b) in electronic mode.
Payment of dividend or interest or redemption or repayment.
12. The listed entity shall use any of the electronic mode of payment facility approved by
the Reserve Bank of India, in the manner specified in Schedule I, for the payment of
the following:
(a) dividends;
(b) interest;
(c) redemption or repayment amounts:
Provided that where it is not possible to use electronic
mode of payment, ‗payable-at-par‘
warrants or cheques may be issued:
Provided further that where the amount payable as dividend exceeds one thousand and five hundred
rupees, the ‗payable-at-par‘ warrants or cheques
shall be sent by speed
post.
Grievance Redressal Mechanism.
13. (1)The listed entity shall ensure that adequate steps are taken for expeditious redressal
of investor complaints.
(2)The listed entity shall
ensure that it is registered on the SCORES platform or such other
electronic platform or
system
of the Board as shall
be mandated from
time to time, in order
to handle investor complaints
electronically in the manner
specified by the Board.
(3)The listed entity shall file with the recognised stock exchange(s) on a quarterly basis,
within twenty one days from the end of each quarter, a statement giving the number of
investor complaints pending
at
the beginning
of the quarter, those received during
the quarter, disposed of during the quarter and those remaining unresolved at the end of the quarter.
(4)The statement as specified in sub-regulation (3) shall beplaced, on quarterly basis, before the board
of directors of the listed entity.
(b) "independent director" means a non-executive director, other than a nominee director
of the listed entity:
(i) who, in the opinion of the board of directors, is a person of integrity and
possesses relevant expertise and
experience;
(ii)
who is or was not a promoter of the listed entity or its holding, subsidiary
or associate company;
(iii) who is not related to promoters or directors in the listed
entity, its holding, subsidiary or associate company;
(iv) who, apart from receiving
director's remuneration, has or had no material
pecuniary relationship with
the listed entity, its holding,
subsidiary or associate company, or their
promoters, or directors,
during the two immediately preceding financial years or
during the current
financial year;
(v) none of whose relatives has or had pecuniary relationship or transaction with
the listed entity, its holding, subsidiary
or associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed from time to time, whichever is lower, during the
two immediately preceding financial years or
during the current
financial year;
(vi) who, neither
himself, nor whose relative(s) —
(A) holds or has held the position of a key managerial personnel or is or
has
been an employee of the listed entity
or its holding, subsidiary or associate company
in any of the three financial years immediately preceding the financial year
in which he is proposed
to be appointed;
(B) is or has been an employee or proprietor or a partner, in any of the three
financial years
immediately preceding
the
financial
year in which
he is proposed to be appointed, of —
(1)a firm
of auditors
or company secretaries
in practice
or cost auditors of the listed entity
or its holding, subsidiary or associate
company; or
(2) any legal or a consulting firm that has or had any transaction
with the listed entity, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;
(C) holds together with his relatives two per cent or more of the total voting power
of the listed entity; or
(D) is a chief executive or director, by whatever name called, of any non-
profit organisation
that receives twenty-five per cent or more of its receipts or corpus
from the listed entity,
any of
its promoters, directors or
its holding, subsidiary or associate company
or that holds two per
cent or more of the total voting power of the
listed entity;
(E) is a material supplier, service provider or customer or a lessor or
lessee of the listed entity;
(vii)who is not less than 21 years
of age.
Boardof Directors.
17. (1) The composition
of board
of directors of the listed
entity shall
be as
follows:
(a) board of directors shall have an optimum combination of executive and non-
executive
directors with at least one woman director and not less than fifty percent.
of the board of directors shall comprise of
non-executive directors;
(b) where the chairperson of the board of directors is a non-executive director, at least one-third of the board of directors shall comprise
of independent directors
and
where the listed entity does not have a regular non-executive chairperson,
at least half of the board of directors
shall comprise
of independent directors: Provided that where the regular non-executive chairperson is a promoter of the
listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent
directors.
Explanation.-For
the
purpose of this
clause,
the
expression
―related to any
promoter"
shall have the following
meaning:
(i) if the promoter is a listed
entity,
its directors other than the independent
directors, its employees or
its nominees shall be deemed to be related to it;
(ii) if the promoter is an unlisted entity, its directors, its employees or its nominees
shall be deemed to be related to it.
(2) The board of directors shall meet at least four times a year, with a maximum time gap
of one hundred and
twenty days
between
any two meetings.
(3)
The board of directors shall periodically review compliance reports pertaining to all
laws applicable to the listed entity, prepared by
the listed entity
as
well as steps taken
by
the listed entity to rectify instances of non-compliances.
(4) The board of directors of the listed entity
shall satisfy itself that plans are in place for orderly succession for appointment
to the board of directors and
senior
management.
(5) (a) The board of directors shall lay down a code of conduct for all members of board of directors and senior management of
the listed entity.
(b)
The code of conduct shall suitably incorporate the duties of independent directors as
laid down in the Companies Act,
2013.
(6) (a) The board of directors shall recommend all fees or compensation, if any, paid to
non-executive directors,
including independent directors and shall require approval of
shareholders in general meeting.
(b)The requirement of obtaining approval of shareholders in general meeting shall not
apply to payment of sitting fees to non-executive directors, if made within the
limits
prescribed under
the
Companies Act,
2013 for payment of sitting
fees without approval
of the Central Government.
(c) The approval of shareholders mentioned
in clause (a), shall specify the limits for the
maximum number of stock options that may be granted to non-executive directors,
in any financial year and
in aggregate.
(d)Independent
directors
shall not be entitled to any stock option.
(7) The minimum information to be placed before the board of directors is specified in
Part
A of Schedule II.
(8) The chief executive officer and the chief financial officer shall provide the compliance certificate to
the
board of directors as
specified in Part
B of Schedule II.
(9) (a) The
listed entity shall lay down procedures to inform
members of
board of directors
about risk assessment and
minimization procedures.
(b)The board of directors
shall
be
responsible
for
framing, implementing
and monitoring the risk
management plan for the listed entity.
(10) The performance evaluation of independent directors shall be done by the entire board
of directors:
Provided that in the above evaluation
the directors who are subject to evaluation shall
not participate:
Audit Committee.
18. (1) Every listed entity shall constitute a qualified and independent audit committee in
accordance
with the terms of reference,
subject to the following:
(a) The audit committee shall have minimum
three directors
as members.
(b)Two-thirds of
the members of audit committee shall be independent
directors.
(c) All
members of audit
committee shall be financially
literate
and at
least one member shall have accounting or
related financial management
expertise.
Explanation (1).-For the purpose of this regulation, ―financially literate‖ shall mean
the ability to read and understand basic financial statements i.e. balance sheet,
profit and
loss account, and statement of cash flows.
Explanation (2).-For the purpose of this regulation , a member shall
be
considered to have accounting or related financial management expertise if he or she possesses experience
in finance or accounting, or requisite professional certification in
accounting, or any other comparable experience or background which results in the individual‘s financial sophistication, including
being or having been a
chief
executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
(d)The chairperson of the audit committee shall be an independent director and he
shall be present at Annual
general meeting to answer shareholder
queries.
(e) The Company Secretary shall
act as the secretary to the audit committee.
(f) The audit committee at its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor
and any other
such executives
to be present at the meetings
of the committee:
Provided that occasionally the audit committee may meet without
the presence of
any executives
of the listed entity.
(2) The listed entity shall conduct the meetings of the audit committee in the following
manner:
(a) The audit committee shall meet at least four times in a year and not more than one
hundred and twenty days shall elapse between
two meetings.
(b)The quorum for audit committee meeting shall eitherbe two members or one third
of the members of the audit committee, whichever is greater, with at least two
independent
directors.
(c) The audit committee shall have powers to investigate any activity within its terms
of reference, seek information from any
employee, obtain outside legal or other
professional advice and secure attendance
of outsiders with relevant expertise,
if it considers necessary.
(3) The role of theaudit committee and the information to be reviewed by the audit committee shall be as specified in
Part
C of
Schedule II.
Nomination and remuneration committee.
19. (1) The board
of directors
shall
constitute
the
nomination and
remuneration
committee as follows:
(a) the committee shall comprise
of atleast three directors
;
(b)all directors of the committee shall be non-executive directors; and
(c) at least fifty percent
of the directors shall be independent directors.
(2) The Chairperson of the nomination and remuneration committee shall be an independent director:
Provided that the chairperson of the listed entity,whether executive or non-executive, may be appointed as a member of the Nomination and Remuneration Committee and shall not chair such Committee.
(3) The Chairperson of the nomination and remuneration committee may be present at the
annual general meeting, to answer the shareholders' queries; however, it shall be up to the chairperson
to decide who shall answer the queries.
(4) The role of the nomination and remuneration committee shall be as specified as in Part D
of the Schedule II.
Stakeholders
Relationship Committee.
20. (1) The listed
entity shall constitute a Stakeholders
Relationship Committee to
specifically look into
the mechanism
of
redressal
of
grievances of shareholders, debenture
holders and other security holders.
(2) The chairperson of
this committee shall
be a non-executive director. (3) The board of directors shall decide other
members of
this committee.
(4) The role of the Stakeholders Relationship Committee shall be as specified as in Part D of the Schedule II.
Risk Management Committee.
21. (1)The board of directors shall constitute a Risk
Management
Committee.
(2) The majority of members of Risk Management Committee shall consist
of members of the board of
directors.
(3) The Chairperson of the Risk management committee shall be a member of the board of directors
and senior executives
of the listed entity may be members
of the committee.
(4) The board of directors shall define the role and responsibility of the Risk Management
Committee and may delegate monitoring and reviewing of the risk management plan to
the committee and such
other
functions as it may deem fit.
(5) The provisions of this regulation
shall be applicable to top 100
listed entities, determined
on the basis of market capitalisation, as at the end of the immediate previous financial year.
Vigil mechanism.
22. (1) The listed entity shall formulate a vigil mechanism for directors and employees to
report genuine concerns.
(2) The
vigil mechanism shall
provide for
adequate safeguards
against
victimization
of director(s) or employee(s) or any other person who avail the mechanism and also provide
for direct access to the chairperson of the audit committee
in appropriate or exceptional cases.
Obligations with
respect to
independent directors.
25. (1) A person shall not serve as an independent director in more than seven listed
entities:
Provided that any person who is serving as a whole time director in any listed entity shall serve as an
independent director in not more than three listed
entities.
(2) The maximum tenure of independent directors shall be in accordance with the Companies
Act, 2013 and rules made thereunder,
in this regard, from
time to time.
(3)
The independent directors of the listed entity shall hold at least one meeting in a year,
without the presence of non-independent directors and members of the management and all the independent
directors
shall strive to be present at such
meeting.
(4) The independent
directors in the meeting referred in
sub-regulation (3) shall, interalia-
(a) review the performance of non-independent directors and the board of directors as a
whole;
(b) review the performance of the chairperson of the listed entity, taking into account the views
of executive directors
and non-executive directors;
(c) assess
the
quality,
quantity
and timeliness
of
flow
of
information between the management of the listed entity and the board of directors that is necessary
for
the board of directors to effectively and reasonably perform
their
duties.
(5) An independent director shall be held liable, only
in respect of such acts of omission or
commission by the listed entity
which had occurred with his knowledge, attributable
through processes of board of directors, and with his consent or connivance or where
he had
not acted diligently with respect to
the provisions contained in
these regulations.
(6) An independent director who resigns or is removed from the board of directors of the listed entity
shall be replaced by a new independent director by listed entity at the earliest but not later than the immediate next meeting
of the board of directors or three months from
the
date of such vacancy, whichever is later:
Provided that where the listed entity fulfils the requirement of independent directors in its board of directors without filling the vacancy created by
such resignation or removal, the
requirement of replacement by a new independent director shall not apply.
(7) The listed entity shall familiarise the independent directors through various programmes
about the listed entity, including the
following:
(a) nature of
the industry in which
the listed entity operates;
(b) business model of the
listed entity;
(c) roles, rights, responsibilities
of independent directors;
and
(d) any other
relevant information.