The Securities and Exchange Board of India (Sebi) has revised Clause 49 of the listing agreement dealing with corporate governance.
Companies having a paid-up share capital of Rs 3 crore and above or net worth of Rs 25 crore or more will be required to comply with the requirement of the clause on or before March 31, 2004.
Under the amendments, the board of a company should have equal proportion of executive and non-executive directors with not less than 50 percent of non-executive directors.
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In case of a non-executive chairman, at least one-third of board should comprise independent directors and in case of an executive chairman, at least half of board should comprise independent directors.
All compensation paid to non-executive directors shall be fixed by the board to be approved by shareholders.
The considerations as regards compensation paid to an independent director shall be the same as those applied to a non-executive director.
Details of compensation paid to non-executive directors as well as shares held by them have to be published in annual report or on the company web-site.
Non-executive directors shall be required to disclose their stock holding in the listed company in which they are proposed to be appointed as directors, prior to their appointment.
Board meetings will be held at least four times a year, with a maximum gap of four months between any two meetings.
A director shall not be a member in more than 10 committees or act as chairman of more than five committees across all companies in which he is a director.
Person shall be eligible for the office of non-executive director so long as the term of office did not exceed nine years in three terms of three years each, running continuously.
Audit committees will have minimum three members all of whom will be non-executive directors, with the majority being independent.
The audit committee should meet at least thrice a year with one meeting should be held before finalisation of annual accounts and one every six months.
Its role includes oversight of the company