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hi and welcome to moon shaky recom in this tutorial we are going to talk about the revised clothes 49 of the listing agreement now the various topics that we are going to cover under this tutorial are the first is the applicability of clothes 49 and second are the issues under the revised clothes 49 of listing agreement so starting with the first topic we have is the applicability of clause 49 it says that the clause 49 is applicable to all companies whose equity shares are listed owner recognized Stock Exchange so the clause 49 is applicable to all the listed companies okay so and the compliance with the provisions of clause 49 is optional for the following companies companies having a paid-up capital less than e or equal to ten corrodes and net worth less than equal to 25 Karros as on the last date of previous financial year it is mandatory for all the listed companies however compliance is optional for following companies compliance is optional for following companies first is companies having paid up capital less than or equal to ten corrodes and net worth less than or equal to 25 corrodes this is as on the last date of previous financial state of previous financial year and sickness companies whose equity Shea Capital is listed exclusively on the SME and SME ITP platform since companies whose equity share capital is listed exclusively on SME and SME ITP that one SME small and medium enterprise and medium enterprise an ITP is internet rate protocol so the conclusion we draw from here is that for companies having a paid-up capital greater than 10 crore or net worth greater than 25 crores these companies have to mandatorily comply with the provisions of clause 49 of the listing listed agreement and second is that the clause 49 is not applicable on the unlisted companies so this was the applicability clause coming to next topic that we have is issues under the revised clause 49 this was applicability second is issues under revised clause 49 okay so the various issues that we are going to address under this is first is the Board of Directors Audit Committee management of subsidiary companies disclosures management discussion and analysis information to shareholders and CEO CFO certification starting with the first topic that we have is Board of Directors think I should take up another page we will start with this only first is board of directors Board of directives so we are going to address four things under the Board of Directors these four things are first is composition of Board of Directors composition of Board of Directors compensation of non-executive directors board meetings board meetings and code of conduct so the first is the composition of Board of Directors it is that the board shall have an optimum combination of executive and non-executive director that is first point under this is a point let's say board shall have an optimum combination optimum combination of what executive and the executive directors and non-executive directors and at least this is non-executive directors at least one women director they should with at least one woman director next point under this is the 50% of the directors shall be non-executive directors that is 50% directors non-executive directors and third point is regarding the chairman and the independent directors let me come down to the second page all right so the C point is that if the chairman of the board is a non-executive director then at least one-third of the board should comprise of independent directors houses if chairman is non non-executive director then at least one-third of board should comprise of independent directors and if the chairman is an executive director is executive director then half of the at least half of board shall comprise of independent director half a board shall comprise of independent directors now in condition number C that we saw that is if chairman is a non-executive director then and he is either promoter of the company related to promoter or person occupying the board level position or one level below the board then half of the board shell comprised of independent director so this 1/3 shall be replaced by half in that case what is the condition let's look at it condition is if chairman is non-executive director Chairman is non-executive director and he is either promoter of company related to promote of related to promoter related to person occupying the board position occupying board position person occupying board position or one level build a board or position one level below the board then in that a case then in garter cakes half of the board shall comprise of independent director half of the board shall comprise of independent directors so this was about the composition of Board of Directors coming to the second point under the Board of Directors is the composition of non-executive compensation of non-executive director compensation of non-executive director all fees compensation payable to non-executive director shall be fixed by the word that is compensation which includes all the fees and the plus the compensation that needs to be payable to the non-executive director that we have covered here shall be fixed by board bore means the collective body of the board of directors of the comfy okay it shall require proper approval of shareholders in the General Meeting prior approval of shareholders is mandatory prior approval of shareholders is not required for payment of sitting fees that is if this is within the limits prescribed and they Companies Act 2013 that is for payment of sitting fees for payment of sitting fees prior approval of shareholders is not required this is only in the case when the sitting fees paid is within the limits prescribed under the Companies Act 2013 coming to the third point under Board of Directors we have is board meetings now there shall be at least four board meetings in a year with a maximum gap of four months between any two meetings board meetings at least to know at least four in a year maximum gap between two meetings can be four months this was point a second point under this is the board shall periodically review the compliance report laws and the regulations applicable to the company what will the board do forward she'll periodically review compliance report laws compliance report laws and regulations that are applicable to the company a director can be member in not more than 10 committees across all the companies in which he is a director so come to this was compensation you done with it this is the third point that is board meetings under this point the C point we are covering here now the C point is a director can be a member in not more than 10 committees across all the companies in which he is a director member in not more than 10 committees and he can be chairman in North more than five committees in all the across all the companies in which he is a director D point is chairman in not more than five committees now every director shall give Enver information to the company above the committee's position he holds in other companies and notify changes when the changes take place he point under this's director to furnish annual information to company and we'll information to company regarding what about the committee's positions held by him to company committee positions the committee positions held by search director in other companies and notify changes when they take place when take place and while calculating the limit of five or ten that is five committees chairman in five committees and member in ten committees the private companies and nonprofit making companies shall be excluded in the limit that is for calculating limit of five or ten private companies and nonprofit making companies shall be non profit making companies shall be excluded now the fourth point under board of directors we have is the code of conduct look here this is code of conduct the board shall lay down a code of conduct for all the board members and the senior management of the complainer will lay down the board Code of Conduct board shall lay down code of conduct COC is code of conduct for whom for all the board members and the senior management of company and the senior management of company the code of conduct shall be posted on the website code of conduct shall be posted on the website of the company the code of conduct shall include duties of independent directors as laid down in the Companies Act 2013 COC shall include duties of independent directors duties of independent director as laid down in the compass Act 2013 and next is annual report on corporate governance must contain report of code of conduct and compliance let's write it down over here annual report on corporate governance must contain report on code of conduct and the compliance so this was about the Board of Directors that is first issue we did under the clause 49 of listing agreement of CB now if you look at there are three terms that have been used under this clause first is it on first is an executive director saying it is a non-executive director and third is an independent directive so it becomes imperative to know about these terms so let's look at these terms one by one first is a executive director executive director now executive directives are the persons who are in employment of the company who possess the in-depth knowledge about the company take active part in the day-to-day activities of the company have a personal interest in the company for example the Managing Director and the whole time director now who are the executive directors here these are the persons who are in persons in employment of company possess in-depth knowledge about company take active part in day-to-day activities of company take active part in day-to-day activities or day-to-day affairs of company and have personal interest in the company they have a personal interest in the company because their remuneration directly or indirectly depends upon the successful running of the company so they have a personal interest in the company for example you're managing director or the whole time director of the company next we look at is the non-executive director now non-executive directors are the persons who are not in employment of the company they have a diverse experience and background not intimately connected with the company or concerned with the company except through attending the board meetings and the examples are the nominee director or the professional director so let's just write it down quickly non-executive director these are the persons who are not in employment of company they have diverse experience and background experience and both background not intimately connected with company not intimately connected with company except through attending the board meetings and the example is normally or the professional director nominee or the professional director third is an independent director third is independent director independent director now it specifies that independent director shall mean a non-executive director other than normally director of a company now who is an independent director it is a non-executive director other than other than nominee director further than nominee director of the company okay now this non-executive director who is a person of integrity and possess relevant expertise and experience in the opinion of board a point under the TSA's is a who is a person of integrity and possess relevant expertise and experience in the opinion of board is not or was not the promoter of the company or related to any promoter related to any person occupying management position and at the management level or one level below the board so be point under this is is not or was not promoter of company or related to promoters or related to any person occupying management position management position or one level or one level below the board see point under this is a search independent director is a person who apart from receiving directors remuneration does not have any material pecuniary relationship transactions with the company promoters and lists has been provided under this louis Norris who apart from independent director means earth means a non-executive director who apart from receiving directors remuneration directors remuneration does not have any material back unary relationship transactions with the relationship transactions with the following persons that is transactions with the company the promoters directors of the company senior management holding company holding company subsidiary company and associates during current financial year during current financial year or two years immediately preceding the current financial year the ceiling fan you should do okay so here we are learning about who an independent director is so till now we have covered three points under this that is it says independent director means a non-executive director other than the LA main director of the company who is a person of integrity and possess relevant expertise and experience in the opinion of the board of directors of the company who is not or was not up from water of the company related to promoters or related to any person occupying management position or the position one level below the board of directors and independent director means a non-executive director who apart from receiving directors remuneration does not have any material peculiar relationship transactions with the company promoters directives senior management holding company subsidiary company Associates during the current financial year or two years immediately immediately preceding the current financial year so these were the three points coming to the next metal dishes who is genuine and director who has not been an executive of the company in immediately three preceding banished videos this is d point and page number four point number D under the independent director now it says has not been executive of company in immediately in immediately three preceding financial yours a point this is not a material supplier is not a material supplier or customer or service provider or service receiver service provider or service receiver or service receiver or lesser or lessee of the company now the reason why these these things are excluded because if he is a supplier of the company customer or service provider in that case that person will not be independent and now here we are talking about the things covered in the definition of the independent director that is who can be an independent director now the next point under this is is not substantial shareholder of company is not substantial shareholder of complete substantial shareholder means a shareholder owned only greater than two percent of block of wing lights this was the Board of Directors audit committee under clause 49 in a first issue that we are going to take up under this is the composition of audit committee first is composition of audit committee now audit committee shall have minimum three directors as members minimum three directors as members and 2/3 of the members of audit committee shall be independent directives next point is all the members of audit committee shall be financially literate and at least one member shall be financial expert so this was first point under composition second point is minimum of three directors and out of which out of the total directors two-third of the directors shall be independent directors all members of the all members of audit committee shall be financial literate financial literate and at least one member shall be financial export chairman of audit committee shall be independent director chairman of audit committee shall be independent director and company secretary of the completion act as Secretary of the committee company secretary of company to act as Secretary of Committee so this was about the composition of audit committee coming to the meetings of the audit committee chicken is meetings of audit committee the audit committee shall need at least four times in a year audit committee shall meet at least at least four times in a year four times inner ear ad not more than four months shall elapse between two meetings and maximum gap can be four months between two metals this was about the meetings of audit committee next is the quorum of audit committee quorum shall be two members or one third of members of audit committee whichever is higher and they shall be minimum of two independent directors present in the meeting this is quorum forum shall be two members or one third of members of audit committee one third of members of audit committee whichever is higher whichever is higher and there shall be minimum of two independent directors present two independent directors present next is the powers or the functions of audit committee this is powers or functions of audit committee first is to investigate any activity to investigate any activity seek information from any employee seek information from any employee Nexus obtain outside legal or professional advice obtain outside legal or professional advice and to secure attendance of outsiders with relevant expertise if necessary secure attendance of outsiders with relevant expertise if that is necessary next is the role of audit committee role of audit committee first is to review the financial statements to review the following things to review the following items first is the annual financial statements and the auditor's report auditors report quarterly financial statements before submission to the board or it is report and quarterly financial statement before submission to the board statement of uses or application of funds raised through an issue and statement of funds utilized for purposes other than those stated in prospectus or document or not Asst that is application of fund application of fun raise through issue through issue utilized for other they stated in prospectus and Audit Committee shall review these things third is auditor's performance independence and effectiveness of audit process it shall review the auditors performance independence and effectiveness of audit process the Audit Committee shall review adequacy of internal control system adequacy and internal audit function adequacy and the adequacy of the internal audit function next point is the audit committee shall review the performance of state to tree an internal auditor shall review to review the performance of state to tree and internal auditors and the Audit Committee shall review the functioning of the whistleblower mechanism shall review the functioning of whistleblower mechanism so under the role of audit committee first thing that we have covered is the audit committee shall review these these these these many things second is the audit committee shall approve certain certain things and we will see what all things that the audit committee shall prove that is first was this is to a proof but will the Audit Committee approve the audit committee shall approve the payment of stitute three auditors for any other services rendered by them payment of stray to tree auditors sorry payment of payment of statutory auditors for any services rendered by them subsequent modification of transactions with related parties and appointment of the chief financial officer subsequent modification of transactions with related parties and the third point under this is appointment of chief financial officer appointment of chief financial officer now first was the audit committee shall review these things second is the audit committee shall prove this thing and third is the audit committee shall discuss the following things to discuss significant findings of internal auditors and follow up their own and the nature timing and extent of state to true audit with auditors to discuss what will it discuss first is significant findings significant findings of internal auditors and follow-up their on and follow-up and second is nature timing and extent of statute audit with additives or it with auditors and there are some miscellaneous points under this under the role of audit committee this is the miscellaneous point so we can say others what it will do is it shall recommend the appointment remuneration in terms for appointment of auditors of company this is recommend appointment remuneration and terms for appointment of auditors of company terms for appointment of auditors of company and scrutiny inter-corporate launched in advances add value the undertakings or assets of the company where necessary and this is scrutiny inter-corporate loans and advances in the third point under this is value undertakings or assets of company where necessary all assets of company where necessary okay now there are certain items that are to be mandatorily review by the audit committee so right now we'll discuss the role of audit committee that is it should review the following things it shall approve the following things and it will discuss evolving things now what we are going to cover is that these are the things that should be mandatorily reviewed by the audit committee this is mandatorily review by audit committee there are five things first is management discussion and analysis of financial condition and result of operations so what is the first thing this is MD a MD a is management discussion and analysis of what a financial condition and the result of operations second is the transactions with the related party related party transactions statement of significant related party transactions submitted by the management third it shall review the letter of internal weakness later on internal weakness the management letters or the letters of internal weakness issued by the state tutor auditor their Audit Committee has two mandatorily review the letter or internal weakness you should by the statutory orders the fourth is the internal audit report versus internal audit report internal audit report related to internal control weaknesses related to internal control weakness and the fifth and the last point under this is chief internal audit to the appointment removal and the terms of remuneration of chief internal auditor c.i.a that is the appointment removal and terms of remuneration of chief internal auditor so these are the five things that were required to be mandatorily reviewed by the Audit Committee now we have covered two things first was the board of directors under the issues first was the board of directors the second thing that we covered was the Audit Committee the third that we are going to cover here is nomination and Remuneration Committee now the board of directors have to constitute a nomination elimination committee and now this remanent this nomination and Remuneration Committee shall have at least three non-executive directors and a kissed half shall be independent and the chairman of such committee shall be an independent directors this was all about the nomination and remuneration committed let's quickly jotted down third point nomination and Remuneration Committee Remuneration Committee now who shall constitute this committee the board of directors isis board shall constitute shall constitute nomination and Remuneration Committee and it shall comprise of the nomination Remuneration Committee shall comprise of it is three non-executive directors and at least half shall be independent or shall be independent and chairman of such committee shall be independent director chairman of such committee shall be independent director so this was about the nomination the remuneration committee coming to the next issue under clause 49 is subsidiary companies for this subsidiary companies now about the subsidiary companies the clause 49 says that at least one independent director on the board of directors of welding company shall be director of a material non-listed Indian subsidiary company first point under this is at least one independent director on the board of directors of holding company one independent director of holding Gumpy shall be director of she'll be director over material non-listed Indian subsidiary company Indian subsidiary company it means that unlisted subsidiary whose turnover or net worth is greater than 20% of the consolidated turnover or the net worth of listed holding company and its subsidiary in the immediately preceding furniture that is material non-listed Indian subsidy companies whose turnover or net worth exceeds 20 percent of consolidated turnover or net worth of the company in the immediately preceding initially oh so this was the first point under the subsidiary companies second point is audit committee of holding company shall review the financial statements particularly investment made by the unlisted subsidiary company audit committee of holding company what it shall do it shall review the financial statement particularly investment made by the unlisted subsidiary company and the minutes of board meetings of the unlisted subsidiary companies shall be placed in the board meetings of holding up the debtors board meeting of subsea shall be placed at board meeting of holding company fourth point on the under cases company shall not dispose of shares in its material subsidiary which would reduce its shareholding to less than fifty percent without passing special resolution in general meeting except where such this investment is made under the scheme of arrangement duly approved by the court or tribunal that is complete not to dispose of shares in subsea which would resume reduce its shareholding to less than 50% which reduces shareholding to less than fifty percent without passing special resolution in general meeting however if such disinvestment is made under a scheme or arrangement duly approved by the code of tribunal then the company can do so the fifth and the last point under the subsidy comprises the completion Otzi's the exercise of control over subsidiary without passing special resolution in general meeting that is completion not seize the exercise of control see is the exercise of control over subsidiary control over subsidiary without passing special resolution in general meeting passing special resolution general meeting next comes the MD air report that is management discussion and analysis report so this was the first point that we covered and diamond it early the following things that are determined it early reviewed by the audit companies to the first that we covered into this was the management discussion and analysis report so we are going to cover the management discussion analysis report in detail over here okay this is fifth point and this is page number eight so all right this is MD a report that is management discussion and analysis report now the contents of MD a report are as follows contents of MD a report first is the industry structure and the developments in the industry industry structure and developments in industry cygnus the SWOT analysis that is the threats and the weaknesses SWOT analysis 30 segments baizen product vice performance segment wise n product wise performance the outlook of the company that is how it wants to see itself in the future the risk and concerns of the company for example the arrival of a new competitor in the market internal control system and their adequacy internal control system and their adequacy the developments in the human resource developments in human resource and discussion on financial performance with respect to operational performance discussion of financial performance with respect to the operational performance so this was about the management discussion and analysis report and we looked at the contents of the management discussion and analysis report next is the whistleblower policy of the company this is the sixth point which is whistleblower policy now this says that the completion establish a visual mechanism for directors and employees to report concern about the unethical behavior actual or suspected fraud etc what it does what it requires the company to it requires the company to establish a visual mechanism and what for for the directors and employees to report concerns about the unethical behavior actual or suspected fraud status for reporting on actual or suspected frauds etcetera frauds etc now provide adequate safeguards against the victimization of directors or employees who avail this mechanism then provide direct access to chairmen in exceptional cases and post details of such establishment on the Company's website and the board's report so in first point is it should establish a visual mechanism sickeness provide safeguards against victimization against victimization to the victimization to the directors and the employees who avail this mechanism and direct access to chairman excess to chairman in exceptional cases and post details of establishment on company's website and the board's report establishment this is to be posted on company's website so this was about the whistleblower policy and coming to another issue under the clause 49 of the listing agreement we have is information that needs to be given to the shareholders so this I believe is the seventh point okay after the whistleblower mechanism this is information to shareholders information to share holders now in case of appointment of a new director or reappointment of a director the company shall inform to the shareholders the brief resume a of the director the nature of expertise of the direct name of the companies in which such person holds directorships and member of committees of the board it should also provide the quarterly results in presentations made by the company to the shareholders and the formation and working of stakeholders relationship committee so three things that are required to be informed to the shareholders the first is first is the case of appointment of new director or reappointment of a director that is appointment of a new director or three appointment of a director in the other case the brief resumed a nature of expertise and name of completes in which such person whole directorships holds directorships and membership of committees and membership of comedies of bored so this was the first point second point is under this is quarterly results in presentations made by company Brazil's in presentations made by comfy and the third is formation and working of stakeholders relationship company committee formation and working of stakeholders relationship committee relationship committee for the redress of grievances of shareholders debenture holders and other security holder another issue under Clause 49 we have is CEO CFO certification that is the eighth point CEO CFO certification now the CEO or the CFO of the company shall certify all the following matters to the board of directors CEO or CFO to certify on following metals on following metals they will certify to the board of directors and following things that they will certify are the first one being that they have reviewed the financial and cash flow statements of the company and these statements do not contain any material untrue statement or omit any material fact so first is that they have reviewed the financial statements and the cash flow statement and these statements do not contain any material untrue statement untrue statement or emit any material fact second is that the financial statements presented true and fair view of the company's affairs the financial statements present true and fair view of the company's affairs there is there is no transactions entered by the company's fraudulent illegal or violate the company's code of conduct transactions transactions entered by the company are not fraudulent illegal or violate code of conduct of the company fourth point is that there's of the responsibility for establishing and maintaining the internal control that is acceptance of responsibility for establishing and maintaining internal controls the fifth point under this is that they have disclosed to the auditors an audit committee deficiencies in design or operation of internal controls if any and the steps taken to rectify the deficiencies that is the CEOs are cff certified in the following matters - viewed financial statements in cash flow statement the financial statements present the true and fair view the transactions are not fraudulent illegal or the violate the code of conduct of the company acceptance of responsibility for establishing and maintaining the internal controls and they have disclosed to auditors or the Audit Committee this close to auditors and audit committee deficiencies in design and operation of internal control in design and operation of internal control if any and steps taken to rectify the same so in this point we covered the CEO or CFO certification that is the CEO or CFO of the company to certify on the following matters to the Board of Directors coming to the last issue under the clause 49 of listing agreement we have is the disclosure on other matters which is disclosure on other metals under this the first point we have is the transactions with the related parties since transactions with the related parties that is related party transactions these transactions with related parties shall be disclosed individually material transactions and the transactions not at the arm's length price the related party transactions with the related parties related parties transactions shall be disclosed individually it is the material transactions the material transactions and the transactions not at arm's length price not at arm's length price now all the related party transactions shall require prior approval of audit committee all related party transactions require prior approval of audit committee however audit committee may grant omnibus approval for related party transactions proposed to be entered by the company subject to the following conditions the audit committee may grant omnibus approval omnibus approval for related party transactions proposed to be entered by the company subject to the following conditions now the conditions for this are such approval must be in the interest of complete approval must be in the interest of the company such approval must be reviewed at least once approval it reviewed at least once or approval shall be reviewed on a quarterly basis in such approval must be valid for one year only valid for one year only and such approval must specify the following things must specify the first is the name of related party nature of transaction nature of transaction maximum amount of transaction that can be entered into it such related party maximum amount of transaction that can be entering - that can be entered into and second point under this is indicative base price or current contracted price base price over current contracted price and formula for variation now we have come across a term over here that is omnibus approval here is it omnibus April now what does the term omnibus means omnibus approval means approval of two independent matters together that is approval of two independent matters together independent matters together and only mas approval can be given only for transactions whose value are below one car or approval can be given only for transactions whose values are below one car or so next point under disclosure on other matters where is accounting treatment disclosure first was the related party transactions second that we are covering over here is accounting treatment disclosures accounting treatment disclosures okay so in case of deviation from accounting standard where the following disclosures have been made or not this is only in case of deviation from a is deviation from accounting standard the following things the following disclosures have been made oh no that is the reason for deviation the reason for deviation effect of deviation effect of deviation and the impact due to such deviation and the impact due to such deviation so that was all about close for a clause 49 of listing agreement so I hope you enjoyed learning today's session you'll see with another video thank you