Revised Clause 49 to make management more accountable

Mumbai, Oct 1: The Clause 49, which has recently been revised by the SEBI, of the listing agreement between listed companies and the stock exchanges is all set to enhance the corporate governance (CG) requirements, primarily through increasing the responsibilities of the Board, consolidating the role of the Audit Committee and making management more accountable, says a handbook on CG which has been brought out by Ernst Young Pvt Ltd in collaboration with the Confederation of Indian Industry (CII).

These changes are aimed at moving Indian companies rapidly up the evolutionary path towards business processes and management oversight techniques which are on par with the best in the world, says the handbook which was released by MD of NSE, Ravi Narain, and chairman of Godrej Group, Adi Godrej, jointly during a day-long second CII Conference on CG, which was held here on Friday.

Early 2000 saw a wave of turmoil in the corporate world, which led to CG going through severe scrutiny and occupying more and more time in the boardroom. Globally, CG is going through a makeover through new rules and expectations regarding the compositions of corporate boards, their oversight responsibilities and the transparency of their decisions, says the handbook.

The handbook has been designed to guide companies and their directors through the changes in the revised Clause 49 and their key implications. It also lays out key elements of the pre-existing framework for CG. Thus it provides focused implementation guidance which would be of use to Board members, Chief Finance Officers and Compliance Heads as they navigate through the corporate governance regulatory landscape.

Commenting on role of Director, the handbook says that it spans across the entire gamut of a company's operations and he has the power to contribute in practically every area and hence it has summarised some of the key CG related issues which finds mention in the Companies Act and Clause 49.

Some of the chapters as discussed in the handbook include CG best practices, Board of Directors Powers&Responsibilities on CG, Audit Committee Powers&Responsibilities and Disclosure Requirements.

UNI