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Clause49 XXXX2 PDF
Clause49 XXXX2 PDF
• SEBI asked Indian firms above a certain size to implement Clause 49,
a regulation that strengthens the role of independent directors serving
on corporate boards.
If Chairman is an ED
Tenure
• An ID can only hold office for two terms of five years each.
Stock Options:
• IDs will not be entitled to any stock options of the Company.
CLAUSE 49 ON AUDIT COMMITTEES
Members
• At-least three members, two-thirds of which shall be IDs
• All the members must be financially literate and one member must be
an expert in accounting or related financial management
• The Chairman of the Audit Committee must be an Independent
Director
Meeting
• At-least four times a year and not more than four months gaps
between meetings
Roles
• Oversight of the company’s financial reporting process and the
disclosure of its financial information to ensure that the financial
statement is correct, sufficient and credible.
• Approval of payment to external auditors for any other services
rendered by the external auditors.
CLAUSE 49 ON AUDIT COMMITTEES
contd..
• Recommending to the Board, the appointment, re-appointment and, if
required, the replacement or removal of the external auditor and the
fixation of audit fees.
• Reviewing, with the management, the annual financial statements before
submission to the board for approval
• Reviewing, with the management, the quarterly financial statements
before submission to the board for approval
• Reviewing, with the management, external and internal auditors,
adequacy of the internal control systems.
• Reviewing the company’s financial and risk management policies.
• To look into the reasons for substantial defaults in the payment to the
depositors, debenture holders, shareholders (in case of non payment of
declared dividends) and creditors.
CLAUSE 49 ON AUDIT COMMITTEES
contd..
Review of information by Audit Committee
• Management discussion and analysis of financial condition and results
of operations
• IDs who resign or are removed, are to be replaced with new IDs within
3 months or immediate next Board meeting, whichever is earlier, in
case the requirement of IDs is not met.
• He offered lot of attractive schemes and made the public and big
organizations to invest in his financial outfits.
• Thus he easily owned money worth Rs 900 crores from all the sources.
• It was only when his capital grew from Rs.2 crores in 1992 to Rs.430
crores in 1996 there was a suspicion.
BHANSALI SCAM
• Thus Chain Roop Bhansali was soon charged under various grounds
like fraud, cheating, siphoning off funds from SBI and much more.
• Once the stamp papers were washed it used to give a fresh look after
which they were sold at even discount prices by his network of people
to big corporations such as Indian Oil or the Life Insurance
Corporation
HARSHAD MEHTA SCAM
• Harshad Mehta was making waves in the stock market. He had been
buying shares heavily since the beginning of 1990.
• The crucial mechanism through which the scam was effected was
the ready forward (RF) deal.
• Another instrument used in a big way was the bank receipt (BR).
• The money which was got due to manipulation was used to drive up
the prices of stocks in the stock market.
Thank you