WORKING OF CLAUSE 49 OF SEBI GUIDELINES ON CORPORATE GOVERNANCE

Upon the suggestions of the Narayana Murthy committee, Clause 49 of The Listing Agreement was revised by SEBI as a step towards increasing the prominence of corporate governance in India. Due to various scams that took place in India, Clause 49 was forced to be reformed to avoid certain problems that affect the company and the country`s economy. 1. The Disclosure Policy - This policy under clause 49 has proven to be the most effective measure to fulfill the aim of Corporate governance as this policy under clause 49 helps in maintaining the transparency between the company and shareholders which in turn restore the trust and confidence of the company in the eyes of their shareholders. Disclosure and transparency are the fundamental characteristics of good corporate governance which are consecutively attained by companies when they comply with Clause 49 (1). 2. Composition and Responsibility of the Board - The BOD plays a crucial role in the company`s success as they put in their maximum efforts for bringing the company to distinctive heights. Separation of executive and the non-executive role`s under clause 49 in the board helps in fortification of the overall integrity of the company. The inclusion of independent directors on the boards helps in effective monitoring and upholds better standards of corporate governance in the company. The accountability of the board under clause 49 is another facet that contributes to good corporate governance as it ensures efficiency, effectiveness, and transparency in the business carried by the directors of the company. Corporate Governance and SEBI norms (Cadbury Report, 1992) defined corporate governance as “the system by which businesses are directed and controlled”. Corporate governance is the subjective device by which investors to the companies can assure themselves regarding their returns (Shleifer & Vishny, 1997). The definition given by (OECD, 2004), principles is, Corporate governance contains a set of relationships between a company’s management, its board, its shareholders, and other stakeholders. Corporate governance also includes the arrangement through which the main objectives of the company are set, and the means of getting those objectives and monitoring performances are determined. Good corporate 17 Volume 1 Issue 1 2016 Amity Journal of Corporate Governance AJCG ADMAA governance should provide proper incentives for the board and management to achieve those objectives which are in the interests of the company and its shareholders and should facilitate effective monitoring (SEBI) Securities and Exchange Board of India defined corporate governance as to increase the long-term value of the company for its shareholders and all other interested partners. Corporate governance assimilates financial activity and nonfinancial activity of the company to best perform by safeguarding the interests of related parties and the economy too. Corporate governance is about an ethical code of conduct.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.