A to Z of Corporate Governance|Adv Dr. Rajkumar Adukia

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Role of Independent Directors in Corporate Governance
(Including Role of Board, Women directors, LODR provisions, IRDA, PFRDA
and CPSEs guidelines and sectoral Corporate Governance Frameworks)
PREFACE
The management is the core element of a company. It runs the company and oversees day-to-day
operations. Since the decisions are taken by the board of directors and delegated by the
management, the importance of corporate governance in a company cannot be denied.
Independent directors are valuable to the companies. Outside trusted directors can help mediate
conflict and introduce a measure of neutrality to a company‘s decision-making.
This handbook incorporates the amendments introduced vide the Companies (Amendment) Act
2017, the Companies (Amendment) Act 2019, the Companies (Amendment) Act 2020
consultation paper of SEBI 11th
September 2020 and all amended rules to date viz. the
Companies (Appointment and Qualification of Directors) Rules, 2014, the Companies (Meetings
of Board and its Powers) Rules 2014, the Companies (Accounts) Rules 2014 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules 2014. It also incorporates the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 as amended up to January 2020. The Guidelines on Stewardship Code for
Insurers in India issued by The Insurance Regulatory and Development Authority of India
(IRDA) in 2017 and The Pension Fund Regulatory and Development Authority (PFRDA)
common stewardship code of 2018 and voting policy of 2017 are other added features.
Additionally, a revised format of the Guidelines on Corporate Governance for Central Public
Sector Enterprises (CPEs) 2010 was approved by the Department of Public Enterprises in
December 2018 for implementation from year 2018-2019 and onwards and is included herein.
The Securities and Exchange Board of India has also introduced Stewardship Code for all
Mutual Funds and all categories of Alternate Investment Funds in relation to their investment in

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listed equities which will become applicable from 1st
April 2020, details of which are
incorporated in this handbook.
INTRODUCTION
Corporate Governance frameworks have generally evolved in response to some crisis. Countries
then develop laws and regulations to enable greater accountability of corporations. To develop
healthy economies, it is important to have a healthy corporate sector. Various enactments/
regulations/ guidelines/directions have been issued from time to time in India in the field of
corporate governance. The subject of Corporate Governance has been dealt with by the
Companies Act 2013, Securities and Exchange Board of India vide Securities Laws, Reserve
Bank of India Directions, prescribed Codes of Conducts and global best practices. Apart from
these, various sectoral regulators too have provided governance frameworks for their respective
sectors. The latest corporate governance mechanisms and frameworks have been provided below
with an intention to give the reader overall knowledge of corporate governance in various
sectors. It also contains the provisions related to the independent director, board committees,
performance evaluation of directors, enterprise risk management, internal control and vigil
mechanism, regulators and their role in Corporate Governance.
I. THE COMPANIES ACT, 2013
The Companies Act, 2013 ("New Companies Act") notified by the Government of India,
replaced the former Companies Act, 1956. It has greater emphasis on corporate governance

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through the board and board processes. The Act was amended three times vide the
amendment acts viz. the Companies (Amendment) Act 2015, The Companies (Amendment)
Act 2017 and the Companies (Amendment) Act 2019 and three ordinances viz. the
Companies (Amendment) Ordinance 2018, The Companies (Amendment) Ordinance, 2019
and the Companies (Amendment) Second Ordinance, 2019. Additionally, the Companies
(Amendment) Bill 2020 has been introduced in Parliament on 17th
March 2019.
The Companies (Amendment) Act 2017 which received the assent of the President and
became effective on 3rd
January 2018 made certain amendments to the provisions relating to
directors and independent directors, which have been incorporated in the relevant places. The
Companies (Amendment) Act 2019 received the assent of the President on 31st
July 2019.
Sections of the Act will become effective as and when notified and hence some became
effective on 2nd
November 2018 whereas others became effective on 15th
August 2019 vide
Notification No. S.O 2947 (E) dated 14th
August 2019 have also been incorporated in the
relevant places. Section pertaining to amendments in Corporate Social Responsibility
provisions is still yet to be notified.
A new section 129A [Companies (Amendment) Act, 2020] has been inserted
to empower the Central Government to provide by rules such class or classes
of unlisted companies to prepare periodical financial results of the company,
audit or limited review thereof and their filing with Registrar within 30 days
from the end of that period as specified in the rules.
Section 149 under Chapter XI of the Companies Act, 2013 deals with the subject of the
number and types of Board of Directors a company must have.
A. Board of Directors
Number of Directors

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Section 149(1) prescribes that every public company shall have a minimum of three
directors, private company shall have two directors and one-person company shall have one
director.
The maximum permissible directors cannot exceed 15 in a company. If more directors have
to be appointed, it can be done only with approval of the shareholders after passing a Special
Resolution.
Women Director (Rule 3 of the Companies (Appointment and Qualification of Directors)
Rules, 2014) prescribes:
At least one Women director for the following class of companies:
a) every listed company;
b) every other public company having-
i) paid-up share capital of 100 crore rupees or more; or
ii) turnover of 300 crore rupees or more.
Resident Director
Every company shall have at least one director who stays in India for a total period of not
less than one hundred and eighty-two days during the financial year. In case of a newly
incorporated company this requirement shall apply proportionately at the end of the financial
year in which it is incorporated
Board Composition
Every listed public company shall have at-least one third of total number of directors as
independent directors and the Central Government may further prescribe minimum number
of independent directors in any class or classes of company. [Section 149(4)]
B. Independent Director

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Section 149(6) of the Companies Act, 2013 provides that:
―An independent director in relation to a company, means a director other than a managing
director or a whole-time director or a nominee director, –
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise
and experience;
(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate
company;
(ii) who is not related to promoters or directors in the company, its holding, subsidiary or
associate company;
(c) who has or had no pecuniary relationship, other than remuneration as such director or
having transaction not exceeding ten per cent. of his total income or such amount as may be
prescribed, with the company, its holding, subsidiary or associate company, or their
promoters, or directors, during the two immediately preceding financial years or during the
current financial year;
(d) none of whose relatives—
(i) is holding any security of or interest in the company, its holding, subsidiary or associate
company during the two immediately preceding financial years or during the current
financial year:
Provided that the relative may hold security or interest in the company of face value not
exceeding fifty lakh rupees or two per cent. of the paid-up capital of the company, its
holding, subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company or their
promoters, or directors, in excess of such amount as may be prescribed during the two
immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the indebtedness of
any third person to the company, its holding, subsidiary or associate company or their

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promoters, or directors of such holding company, for such amount as may be prescribed
during the two immediately preceding financial years or during the current financial year; or
(iv) has any other pecuniary transaction or relationship with the company, or its subsidiary,
or its holding or associate company amounting to two per cent. or more of its gross turnover
or total income singly or in combination with the transactions referred to in sub-clause (i), (ii)
or (iii);
(e) who, neither himself nor any of his relatives –
(i) holds or has held the position of a key managerial personnel or is or has been employee of
the company or its holding, subsidiary or associate company in any of the three financial
years immediately preceding the financial year in which he is proposed to be appointed;
Provided that in case of a relative who is an employee, the restriction under this clause shall
not apply for his employment during preceding three financial years
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years
immediately preceding the financial year in which he is proposed to be appointed, of –
(A) a firm of auditors or company secretaries in practice or cost auditors of the company or
its holding, subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the company, its
holding, subsidiary or associate company amounting to ten per cent. Or more of the gross
turnover of such firm;
(iii) holds together with his relatives two per cent. or more of the total voting power of the
company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-profit organization
that receives twenty-five percent. or more of its receipts from the company, any of its
promoters, directors or its holding, subsidiary or associate company or that holds two per
cent. or more of the total voting power of the company; or
(f) who possesses such other qualifications as may be prescribed‖.

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Qualifications
As per Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014
an Independent Director shall possess appropriate skills, experience and knowledge in one or
more fields of finance, law, management, sales, marketing, administration, research,
corporate governance, technical operations or other disciplines related to the company‘s
business.
Compliances required by a person eligible and willing to be appointed as an independent
director.
As per Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014
every individual to get appointed as an independent director in a company shall apply online
to the Indian Institute of Corporate Affairs for inclusion of his name in the data bank for a
period of one year or five years or for his life-time, and from time to time take steps as
specified, till he continues to hold the office of an independent director in any company.
Every individual whose name has been so included in the data bank shall file an application
for renewal for a further period of one year or five years or for his life-time, within a period
of thirty days from the date of expiry of the period up to which the name of the individual
was applied for inclusion in the data bank, failing which, the name of such individual shall
stand removed from the data bank of the institute. However, no application for renewal shall
be filed by an individual who has paid life-time fees for inclusion of his name in the data
bank.
Every individual whose name is so included in the data bank shall pass an online proficiency
self-assessment test conducted by the institute within a period of one year from the date of
inclusion of his name in the data bank, failing which, his name shall stand removed from the
databank of the institute. Provided that an individual shall not be required to pass the online
proficiency self-assessment test, when he has served as a director or key managerial
personnel, for a total period of not less than ten years, as on the date of inclusion of his name

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in the databank, in one or more of the following, namely:-
(a) listed public company; or
(b) unlisted public company having a paid-up share capital of rupees ten crore or more; or
(c) body corporate listed on a recognized stock exchange:
 An individual who has obtained a score of not less than sixty percent. in aggregate in
the online proficiency self-assessment test shall be deemed to have passed such test.
Also, there shall be no limit on the number of attempts an individual may take for
passing the online proficiency self-assessment test.
As per Rule 8 of the Companies (Accounts) Rules, 2014, the Board of Directors Report shall
include a statement regarding opinion of the Board with regard to integrity, expertise and
experience (including the proficiency) of the independent directors appointed during the year.
The expression ―proficiency‖ means the proficiency of the independent director as
ascertained from the online proficiency self-assessment test mentioned above.
Number of Independent Directors
Every listed public company shall have at-least one third of total number of directors as
independent directors and the Central Government may further prescribe minimum number
of independent directors in any class or classes of company. [Section 149(4)]
As per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014,
the following class or classes of Companies shall have at least two independent directors -
Public company having:
i. Paid up share capital of 10 crore rupees or more; or
ii. Turnover of 100 crore rupees or more; or
iii. In aggregate of outstanding loans, debentures and deposits of 50 crore rupees or
more.
Vide the Companies (Appointment and Qualification of Directors) Amendment Rules, 2017
dated 5th July 2017, an unlisted public company which is a joint venture, a wholly owned
subsidiary or a dormant company will not be required to appoint Independent Directors. A
"joint venture‖ would mean a joint arrangement, entered into in writing, whereby the parties

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that have joint control of the arrangement, have rights to the net assets of the arrangement.
The usage of the term is similar to that under the Accounting Standards.
Declaration of Independence
Section 149(7) of Companies Act, 2013 provides that every independent director shall at the
first meeting of the Board in which he participates as a director and thereafter at the first
meeting of the Board in every financial year or whenever there is any change in the
circumstances which may affect his status as an independent director, give a declaration that
he meets the criteria of independence.
Term of Office
Section 149(10) provides that subject to the provisions of Section 152, an independent
director shall hold office for a term up to five consecutive years on the Board of a company,
but shall be eligible for reappointment on passing of a special resolution by the company and
disclosure of such appointment in the Board‘s report.
The Companies (Removal of Difficulties) Order 2018 dated 21st
February 2018 has clarified
that an independent director re-appointed for second term under sub-section (10) of section
149 shall be removed by the company only by passing a special resolution and after giving
him a reasonable opportunity of being heard.
No independent director shall hold office for more than two consecutive terms, but such
independent director shall be eligible for appointment after the expiration of three years of
ceasing to become an independent director. [Section 149(11)]
Code of Conduct
Section 149(8) provides that the company and the independent directors shall abide by the
provisions specified in Schedule IV of the Companies Act 2013.

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Liability of the Independent Director
An independent director shall be held liable, only in respect of such acts of omission or
commission by the listed entity which had occurred with his knowledge, attributable through
processes of board of directors, and with his consent or connivance or where he had not acted
diligently.
Other Provisions
The Independent directors must attend at least one meeting a year without the attendance of
non-independent directors and members of management.
The Independent directors shall not be entitled to any stock option and may receive
remuneration by way of fee, reimbursement of expenses for participation in the Board and
other meetings and also receive commission.
C. Related Party Transactions
As per section 2(76) ―Related party‖, with reference to a company, means—
i. a director or his relative
ii. a KMP or his relative;
iii. a firm, in which a director, manager or his relative is a partner;
iv. a private company in which a director or manager or his relative is a member or
director;
v. a public company in which a director or manager is a director and holds along with
his relatives, more than 2% of its paid-up share capital;
vi. anybody corporate whose Board of Directors, managing director or manager is
accustomed to act in accordance with the advice, directions or instructions of a
director or manager;
vii. any person on whose advice, directions or instructions a director or manager is
accustomed to act;
viii. any company which is—

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(A) a holding, subsidiary or an associate company of such company; or
(B) a subsidiary of a holding company to which it is also a subsidiary.
ix. such other person as may be prescribed.
As per Section 134(3)(h) of the Companies Act 2013, the Board‘s Report shall contain
particulars of contracts or arrangements with related party as referred in section 188 of the
Companies Act, 2013 in Form AOC-2 prescribed under Rule 8 of Companies (Accounts)
Rules, 2014.
As per Section 39 of the Companies (Amendment) Act, 2020 In case of listed company
Such director or employee shall be liable to a penalty of Rs. 25 lakh. In case of company other than
listed company, such director or employee shall be liable to a penalty of Rs. 5 lakh.
Omnibus approval for related party transactions on annual basis
Rule 6A of Companies (Meeting of Board and its Powers) Rules, 2014 provides that all
related party transactions shall require approval of the Audit Committee and the Audit
Committee may make omnibus approval for related party transactions proposed to be entered
into by the company subject to the following conditions, namely: -
(1) The Audit Committee shall, after obtaining approval of the Board of Directors, specify
the criteria for making the omnibus approval which shall include the following, namely: -
(a) maximum value of the transactions, in aggregate, which can be allowed under the
omnibus route in a year;
(b) the maximum value per transaction which can be allowed;
(c) extent and manner of disclosures to be made to the Audit Committee at the time of
seeking omnibus approval;
(d) review, at such intervals as the Audit Committee may deem fit, related party transaction
entered into by the company pursuant to each of the omnibus approval made;

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(e) transactions which cannot be subject to the omnibus approval by the Audit Committee.
(2) The Audit Committee shall consider the following factors while specifying the criteria for
making omnibus approval, namely: -
(a) repetitiveness of the transactions (in past or in future);
(b) justification for the need of omnibus approval.
(3) The Audit Committee shall satisfy itself on the need for omnibus approval for
transactions of repetitive nature and that such approval is in the interest of the company.
(4) The omnibus approval shall contain or indicate the following: -
(a) name of the related parties;
(b) nature and duration of the transaction;
(c) maximum amount of transaction that can be entered into;
(d) the indicative base price or current contracted price and the formula for variation in the
price, if any;
(e) any other information relevant or important for the Audit Committee to take a decision on
the proposed transaction:
Provided that where the need for related party transaction cannot be foreseen and aforesaid
details are not available, audit committee may make omnibus approval for such transactions
subject to their value not exceeding rupees one crore per transaction.
(5) Omnibus approval shall be valid for a period not exceeding one financial year and shall
require fresh approval after the expiry of such financial year.
(6) Omnibus approval shall not be made for transactions in respect of selling or disposing of
the undertaking of the company.
(7) Any other conditions as the Audit Committee may deem fit.‖

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D. Board Meetings
As per section 173(1) every company shall hold the first meeting of the Board of directors
within thirty days of the date of its incorporation.
Frequency of Board meetings
Board meetings should be held regularly, at least four times in a year, with a maximum
interval of 120 days between meetings.
In case of One Person Company (OPC), small company and dormant company, at least one
Board meeting should be conducted in each half of the calendar year and the gap between
two meetings should not be less than Ninety days.
Notice of board meetings
Notice of Board Meeting shall be sent at least 7 days before the meeting and such notice shall
be sent by hand delivery or by post or by electronic means. In case the Board meeting is
called at shorter notice, at least one independent director shall be present at the meeting. If he
is not present, then decision of the meeting shall be circulated to all directors and it shall be
final only after ratification of decision by at least one Independent Director.
Quorum for Board Meetings
As per Section 174 of the Companies Act, 2013, one third of total strength or two directors,
whichever is higher, shall be the quorum for a meeting.
For the purpose of determining the quorum, the participation by a director through Video
Conferencing or other audio visual means shall also be counted. If at any time the number of
interested directors exceeds or is equal to two-thirds of the total strength of the Board of
directors, the number of directors who are not interested and present at the meeting, being not
less than two shall be the quorum during such time.

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Where a meeting of the Board could not be held for the want of quorum, then, unless the
articles provide the meeting shall be held to the same day at the same time and place in the
next week or if the day is National Holiday, the next working day at the same time and place.
Penalty
Every officer of the company who is duty bound to give notice under this section if fails to
do so shall be liable to a penalty of twenty-five thousand rupees.
E. Powers of Board
As per Section 179 of the Companies Act, 2013 the Board of directors of a company shall be
entitled to exercise all such powers, and to do all such acts and things, as the company is
authorized to exercise and do. The Board shall not exercise any power or do any act or thing
which is required, whether by this or any other Act or by the memorandum or articles of the
company, to be exercised or done by the company in general meeting.
As per Section 179(3) read with Rule 8 of Companies (Meetings of Board and its Powers)
Rules, 2014, the Board of Directors of a company shall exercise the following powers on
behalf of the company by means of resolutions passed at meetings of the Board, namely:—
(1) to make calls on shareholders in respect of money unpaid on their shares;
(2) to authorize buy-back of securities under section 68;
(3) to issue securities, including debentures, whether in or outside India;
(4) to borrow monies;
(5) to invest the funds of the company;
(6) to grant loans or give guarantee or provide security in respect of loans;
(7) to approve financial statement and the Board‘s report;

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(8) to diversify the business of the company;
(9) to approve amalgamation, merger or reconstruction;
(10) to take over a company or acquire a controlling or substantial stake in another company;
(11) to make political contributions;
(12) to appoint or remove key managerial personnel (KMP);
(13) to appoint internal auditors and secretarial auditor;
F. Board Committees
1. Audit Committee
Section 177 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules,
2014 states that the Board of directors of every listed public company and the following
classes of companies shall constitute an Audit Committee-
iii. In aggregate of outstanding loans, or borrowings or debentures or deposits exceeding
50 crore rupees or more.
Composition
The Audit Committee shall consist of a minimum three directors with independent directors
forming a majority provided that majority of members of Audit Committee including its
chairperson shall be person with ability to read and understand the financial statement.
2. Nomination & Remuneration Committee

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Section 178 read with Rule 6 of Companies (Meeting of Board and its Powers) Rules, 2014
states that the Board of directors of every listed public company and the following classes of
companies shall constitute the Nomination & Remuneration Committee-
iii. In aggregate of outstanding loans, or borrowings or debentures or deposits exceeding
50 crore rupees or more.
The Nomination & Remuneration Committee shall consist of 3 or more non-executive
directors out of which not less than one half shall be independent directors.
The Nomination and Remuneration Committee shall identify persons who are qualified to
become directors and who may be appointed in senior management in accordance with the
criteria laid down, recommend to the Board their appointment and removal, shall specify the
manner for effective evaluation of performance of Board, its committees and individual
directors to be carried out either by the Board, by the Nomination and Remuneration
Committee or by an independent external agency and review its implementation and
compliance. [Section 178(2)]
The Nomination and Remuneration Committee shall formulate the criteria for determining
qualifications, positive attributes and independence of a director and Recommend to the
Board a policy, relating to the remuneration for the directors, key managerial personnel and
other employees. [Section 178(3)]
The Nomination and Remuneration Committee shall while formulating the policy ensure
that—
a) the level and composition of remuneration is reasonable and sufficient to attract, retain and
motivate directors of the quality required to run the company successfully;
b) relationship of remuneration to performance is clear and meets appropriate performance
benchmarks; and

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c) remuneration to directors, KMPs and senior management involves a balance between fixed
and incentive pay reflecting short and long-term performance objectives appropriate to the
working of the company and its goals. [Section 178(4)].
The policy shall be disclosed in the Board‘s report. Such Policy shall also be placed on the
website of the company, if any. The salient features of the policy and any changes therein
along with the web address of the policy, if any, will be disclosed in the Board‘s Report.
3. Stakeholders Relationship Committee
As Per Section 178(5) of the Companies Act, 2013, the Board of Directors of a company that
has more than one thousand shareholders, debenture-holders, deposit-holders and any other
security holders at any time during a financial year is required to constitute a Stakeholders
Relationship Committee consisting of a chairperson who shall be a non-executive director
and such other members as may be decided by the Board.
The Stakeholders Relationship Committee shall consider and resolve the grievances of
security holders of the company.
The chairperson of each of the committees constituted under this section or, in his absence,
any other member of the committee authorized by him in this behalf shall attend the general
meetings of the company.
4. Corporate Social Responsibility (CSR) Committee
Section 135 and Schedule VII of the Companies Act 2013 as well as the provisions of the
Companies (Corporate Social Responsibility Policy) Rules, 2014 give the important
provisions with respect to corporate social responsibility of companies
As per section 135 of the companies Act, 2013, every company having net worth of rupees
five hundred crores or more, or turnover of rupees one thousand crores or more or a net profit

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of rupees five crores or more during the immediately preceding financial year, shall
constitute a Corporate Social Responsibility Committee.
The Corporate Social Responsibility Committee shall consist of three or more directors, out
of which at least one director shall be an independent director. Where a company is not
required to appoint an independent director under section 149(4) of the Companies Act 2013,
it shall have in its Corporate Social Responsibility Committee two or more directors.
The board shall ensure that the Company spends, in every financial year, at least two per
cent. of the average net profits of the company made during the three immediately preceding
financial years, in pursuance of its Corporate Social Responsibility Policy. If the company
fails to spend such amount, the Board shall, specify the reasons for not spending the amount.
As per Rule 9 of the Companies (Accounts) Rules, 2014 the disclosure of contents of
Corporate Social Responsibility Policy in the Board‘s report and on the company‘s website,
if any, shall be as per annexure attached to the Companies (Corporate Social Responsibility
Policy) Rules, 2014.
As per Section 27 of the Companies (Amendment) Act, 2020 the companies,
which spend an amount in excess of the requirement of 2%, will be allowed to
set off such excess amount out of their obligation in the succeeding financial
years after complying with the prescribed rules.
New sub-section (9) has been inserted to provide that the requirement of
constitution of CSR Committee shall not be applicable, in case the amount
required to be spent on CSR does not exceed Rs. 50 lakhs and the functions of
CSR Committee in such a case, may be discharged by the Board of directors.
Company shall be liable to a penalty of twice the amount required to be
transferred by the company to the Fund specified in Schedule VII or the
Unspent CSR Account, as the case may be, or Rs. 1 crore, whichever i s less,
and every officer of the company who is in default shall be liable to a penalty
of one-tenth of the amount required to be transferred by the company to such

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Fund specified in Schedule VII, or the Unspent CSR Account, as the case may
be, or Rs. 2 lakh, whichever is less.

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Schedule VII of the Companies Act 2013 contains the list of indicative activities which may
be included by companies in their Corporate Social Responsibility Policies. These are as
follows:
(i) Eradicating hunger, poverty and malnutrition, promoting health care including preventive
health care and sanitation including contribution to the Swachh Bharat Kosh set-up by the
Central Government for the promotion of sanitation and making available safe drinking
water.
(ii) promoting education, including special education and employment enhancing vocation
skills especially among children, women, elderly and the differently abled and livelihood
enhancement projects.
(iii) promoting gender equality, empowering women, setting up homes and hostels for
women and orphans; setting up old age homes, day care centers and such other facilities for
senior citizens and measures for reducing inequalities faced by socially and economically
backward groups.
(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna,
animal welfare, agroforestry, conservation of natural resources and maintaining quality of
soil, air and water including contribution to the Clean Ganga Fund set-up by the Central
Government for rejuvenation of river Ganga.
(v) protection of national heritage, art and culture including restoration of buildings and sites
of historical importance and works of art; setting up public libraries; promotion and
development of traditional art and handicrafts;
(vi) measures for the benefit of armed forces veterans, war widows and their dependents;
(vii) training to promote rural sports, nationally recognized sports, Paralympic sports and
Olympic sports

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(viii) contribution to the prime minister's national relief fund or any other fund set up by the
central govt. for socio economic development and relief and welfare of the schedule caste,
tribes, other backward classes, minorities and women;
(ix) Contribution to incubators funded by Central Government or State Government or any
agency or Public Sector Undertaking of Central Government or State Government, and
contributions to public funded Universities, Indian Institute of Technology (IITs), National
Laboratories and Autonomous Bodies (established under the auspices of Indian Council of
Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of
Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defense
Research and Development Organization (DRDO), Department of Biotechnology (DBT),
Department of Science and Technology (DST), Ministry of Electronics and Information
Technology) engaged in conducting research in science, technology, engineering and
medicine aimed at promoting Sustainable Development Goals (SDGs).
(x) rural development projects
(xi) slum area development.
(xii) disaster management, including relief, rehabilitation and reconstruction activities.
Further, vide circular no. 10/2020 dated 23rd
March 2020, the Ministry of Corporate Affairs
has clarified that spending of CSR funds for COVID-19 is eligible CSR activity. Funds may
be spent for various activities related to COVID-19 under item nos. (i) and (xii) of Schedule
VII relating to promotion of health care including preventive healthcare and sanitation and
disaster management.
The Companies (Amendment) Act 2019 relating to Amendments in the CSR provisions has
not yet been notified. The amendment when notified will bring about a few changes - The
most important being the amendment to allow companies to spend their Corporate Social
Responsibility funds over a period of three years instead of the current year itself. Also, the
amendment will require businesses to transfer the CSR amount allocated in specific years to
a dedicated fund set up by the government if the company could not utilize it for three years.

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Also penal provisions as follows will become applicable: the company would be punishable
with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 25 lakh and
every officer of such company who is in default shall be punishable with imprisonment for a
term which may extend to 3 years or with fine which shall not be less than Rs. 50,000 but
which may extend to Rs. 5 lakhs, or with both.
G. Vigil mechanism
Section 177(9) read with Rule 7 of the Companies (Meeting of Board and its Power) Rules,
2014 prescribes that every listed company and the companies belonging to the following
class or classes shall establish a vigil mechanism for their directors and employees to report
their genuine concerns or grievances-
(a) the Companies which accept deposits from the public;
(b) the Companies which have borrowed money from banks and public financial institutions
in excess of fifty crore rupees.
The companies which are required to constitute an audit committee shall oversee the vigil
mechanism through the committee and if any of the members of the committee have a
conflict of interest in a given case, they should recuse themselves and the others on the
committee would deal with the matter on hand.
In case of other companies, the Board of directors shall nominate a director to play the role of
audit committee for the purpose of vigil mechanism to whom other directors and employees
may report their concerns.
The vigil mechanism shall provide for adequate safeguards against victimization of
employees and directors who avail of the vigil mechanism and also provide for direct access
to the Chairperson of the Audit Committee or the director nominated to play the role of Audit
Committee, as the case may be, in exceptional cases.
The details of establishment of Vigil mechanism shall be disclosed by the company in the
website, if any, and in the Board‘s Report.

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H. Risk management
Section 134(3)(n) provides that the Board‘s report as prescribed under Section 134(3)
required to include in the Board‘s Report, a statement indicating development and
implementation of a risk management policy for the company including identification therein
of elements of risk, if any, this in the opinion of the Board may threaten the existence of the
company.
I. Disclosures
1. Disclosures under Section 134 of the Companies Act 2013
Section 134(3) Provides that there shall be attached to statements laid before a company in
general meeting, a report by its Board of Directors, which shall include—
(a) the web address, if any, where annual return referred to in sub-section (3) of section 92
has been placed;
(b) number of meetings of the Board;
(c) Directors‘ Responsibility Statement
(d) a statement on declaration given by independent directors under section 149(6)
(e) in case of a company covered under sub-section (1) of section 178, company‘s policy on
directors‘ appointment and remuneration including criteria for determining qualifications,
positive attributes, independence of a director and other matters as given under sub-section
(3) of section 178.
(f) explanations or comments by the Board on every qualification, reservation or adverse
remark or disclaimer made—
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report.
(g) particulars of loans, guarantees or investments under section 186.

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(h) particulars of contracts or arrangements with related parties referred to in sub-section (1of
section 188 in the prescribed form.
(i) the state of the company‘s affairs.
(j) the amounts, if any, which it proposes to carry to any reserves.
(k) the amount, if any, which it recommends should be paid by way of dividend.
(l) material changes and commitments, if any, affecting the financial position of the company
which have occurred between the end of the financial year of the company to which the
financial statements relate and the date of the report.
(m) the conservation of energy, technology absorption, foreign exchange earnings and outgo,
in such manner as may be prescribed.
(n) a statement indicating development and implementation of a risk management policy for
the company including identification therein of elements of risk, if any, which in the opinion
of the Board may threaten the existence of the company.
(o) the details about the policy developed and implemented by the company on corporate
social responsibility initiatives taken during the year.
(p) in case of a listed company and every other public company having such paid-up share
capital as may be prescribed, a statement indicating the manner in which formal annual
evaluation of the performance of the Board, its Committees and of individual directors has
been made;
(q) such other matters as may be prescribed.
Provided that where disclosures referred to above have been included in the financial
statements, such disclosures shall be referred to instead of being repeated in the Board's
report. Further, where the policy referred to in clause (e) or clause (o) above is made
available on company's website, if any, it shall be sufficient compliance of the requirements
under such clauses if the salient features of the policy and any change therein are specified in

25
brief in the Board's report and the web-address is indicated therein at which the complete
policy is available.
In case of any contravention of the provisions of sections 177 and 178, then
as per Section 36 of the Companies (Amendment) Act, 2020, Company shall
be liable to a penalty of Rs. 5 lakh and every officer of the company who is
in default shall be liable to a penalty of Rs. 1 lakh.
If a director of the company does not disclose the nature of his interest under this
section, then as per Section 37 of the Companies (Amendment) Act, 2020, such
director shall be liable to a penalty of Rs. 1 lakh.
2. The Directors’ Responsibility Statement
Section 134(5) The Directors‘ Responsibility Statement shall state that—
(a) in the preparation of the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the company at the end of the financial year and of the profit
and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding the assets
of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors, in the case of a listed company, had laid down internal financial controls to
be followed by the company and that such internal financial controls are adequate and were
operating effectively.
Explanation to clause(e) defines the term ―internal financial controls as the policies and
procedures adopted by the company for ensuring the orderly and efficient conduct of its

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business, including adherence to company‘s policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy and completeness of the
accounting records, and the timely preparation of reliable financial information;
(f) the directors had devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
3. Matters to be disclosed in the Board’s Report
As per Rule 8 of Companies (Accounts) Rules 2014 following matters to be disclose in the
Board‘s Report:-
(1) The Board‘s Report shall be prepared based on the stand alone financial statements of the
company and shall report on the highlights of performance of subsidiaries, associates and
joint venture companies and their contribution to the overall performance of the company
during the period under report
(2) The Report of the Board shall contain the particulars of contracts or arrangements with
related parties referred to in sub-section (1) of section 188 in the Form AOC-2.
(3) The report of the Board shall contain the following information and details, namely: -
(A) Conservation of energy-
(i) the steps taken or impact on conservation of energy;
(ii) the steps taken by the company for utilizing alternate sources of energy;
(iii) the capital investment on energy conservation equipment;
(B) Technology absorption-
(i) the efforts made towards technology absorption;
(ii) the benefits derived like product improvement, cost reduction, product development or
import substitution;
(iii) in case of imported technology (imported during the last three years reckoned from the
beginning of the financial year)- (a) the details of technology imported; (b) the year of
import; (c) whether the technology been fully absorbed; (d) if not fully absorbed, areas where

27
absorption has not taken place, and the reasons thereof; and
(iv) the expenditure incurred on Research and Development.
(C) Foreign exchange earnings and Outgo-
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign
Exchange outgo during the year in terms of actual outflows. Provided that the requirement of
furnishing information and details under this sub-rule shall not apply to a government
company engaged in producing defense equipment.
(4) Every listed company and every other public company having a paid up share capital of
twenty five crore rupees or more calculated at the end of the preceding financial year shall
include, in the report by its Board of directors, a statement indicating the manner in which
formal annual evaluation has been made by the Board of its own performance and that of its
committees and individual directors.
(5) In addition to the information and details specified in sub-rule (4), the report of the Board
shall also contain –
(i) the financial summary or highlights;
(ii) the change in the nature of business, if any;
(iii) the details of directors or key managerial personnel who were appointed or have resigned
during the year;
(iii) a statement regarding opinion of the Board with regard to integrity, expertise and
experience (including the proficiency) of the independent directors appointed during the year
(iv) the names of companies which have become or ceased to be its Subsidiaries, joint
ventures or associate companies during the year;
(v) the details relating to deposits, covered under Chapter V of the Act
(vi) the details relating to deposits, not in compliance with Chapter V of the Act.

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(vii) the details of significant and material orders passed by the regulators or courts or
tribunals impacting the going concern status and company‘s operations in future.
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements.
(ix) a disclosure, as to whether maintenance of cost records as specified by the Central
Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by
the Company and accordingly such accounts and records are made and maintained,
(x) a statement that the company has complied with provisions relating to the constitution of
Internal Complaints Committee under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
(6) This rule shall not apply to One Person Company or Small Company.
4. Other disclosure in the Board’s Report
Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules,
2014 provides the following disclosure by the listed companies in the Board‘s Report:-
(i) the ratio of the remuneration of each director to the median remuneration of the
employees of the company for the financial year;
(ii) the percentage increase in remuneration of each director, Chief Financial Officer, Chief
Executive Officer, Company Secretary or Manager, if any, in the financial year;
(iii) the percentage increase in the median remuneration of employees in the financial year;
(iv) the number of permanent employees on the rolls of company;
(v) average percentile increase already made in the salaries of employees other than the
managerial personnel in the last financial year and its comparison with the percentile increase
in the managerial remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration;

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(vi) affirmation that the remuneration is as per the remuneration policy of the company.
As per Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel)
Rules, 2014, The board‘s report shall include a statement showing the names of the top ten
employees in terms of remuneration drawn and the name of every employee, who -
(i) if employed throughout the financial year, was in receipt of remuneration for that year
which, in the aggregate, was not less than one crore and two lakh rupees;
(ii) if employed for a part of the financial year, was in receipt of remuneration for any part
of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand
rupees per month;
(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration
in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate,
is in excess of that drawn by the managing director or whole-time director or manager and
holds by himself or along with his spouse and dependent children, not less than two percent
of the equity shares of the company.
(3) The statement referred to above shall also indicate -
(i) designation of the employee;
(ii) remuneration received;
(iii) nature of employment, whether contractual or otherwise;
(iv) qualifications and experience of the employee;
(v) date of commencement of employment;
(vi) the age of such employee;
(vii) the last employment held by such employee before joining the company;
(viii) the percentage of equity shares held by the employee in the company and
(ix) whether any such employee is a relative of any director or manager of the company and
if so, name of such director or manager.
Provided that the particulars of employees posted and working in a country outside India, not
being directors or their relatives, drawing more than sixty lakh rupees per financial year or
five lakh rupees per month, as the case may be, as may be decided by the Board, shall not be

30
circulated to the members in the Board‘s report, but such particulars shall be filed with the
Registrar of Companies while filing the financial statement and Board Reports.
Provided further that such particulars shall be made available to any shareholder on a specific
request made by him in writing before the date of such Annual General Meeting wherein
financial statements for the relevant financial year are proposed to be adopted by
shareholders and such particulars shall be made available by the company within three days
from the date of receipt of such request from shareholders.
Provided also that in case of request received even after the date of completion of Annual
General Meeting, such particulars shall be made available to the shareholders within seven
days from the date of receipt of such request.
II. SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2015
In the year 2000, SEBI had set up a Committee under the Chairmanship of Kumar Mangalam
Birla to promote and raise standards of corporate governance. According to his
recommendation, Clause 49 was incorporated in the Listing Agreement. In the year 2002,
Securities and Exchange Board of India (SEBI) constituted a Committee under the
Chairmanship of Shri N.R. Narayana Murthy which recommended for revised clause 49.
Then, in the year 2015, in order to align with the Companies Act, 2013, SEBI had notified
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on 2nd
September 2015 vide No. SEBI/LAD-NRO/GN/2015-16/013, which became applicable from
1st December 2015 for the listed entity who has listed designated securities on recognized
stock exchanges. It contains 12 Chapters, 103 Regulations and 10 Schedules. These
regulations have been amended 18 times till date, the last being on 10th
January 2020.

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Unless otherwise provided, these regulations shall apply to the listed entity who has listed
any of the following designated securities on recognized stock exchange(s):
(a) specified securities listed on main board or SME Exchange or institutional trading
platform;
(b) non-convertible debt securities, non-convertible redeemable preference shares, perpetual
debt instrument, perpetual non-cumulative preference shares;
(c) Indian depository receipts;
(d) securitized debt instruments;
(da) security receipts;
(e) units issued by mutual funds;
(f) any other securities as may be specified by SEBI.
The provisions of Corporate Governance in SEBI (LODR) Regulations 2015 are:
A. Periodic Disclosures and Obligations
Regulation 4 of the Listing Regulations, 2015 provides for broad principles for periodic
disclosures and for corporate governance by listed entities.
Principles for Periodic Disclosures:
The listed entity which has listed securities shall make disclosures and abide by its
obligations under these regulations, in accordance with the following principles:
(a) Information shall be prepared and disclosed in accordance with applicable standards of
accounting and financial disclosure.
(b) The listed entity shall implement the prescribed accounting standards in letter and spirit in
the preparation of financial statements taking into consideration the interest of all
stakeholders and shall also ensure that the annual audit is conducted by an independent,
competent and qualified auditor.
(c) The listed entity shall refrain from misrepresentation and ensure that the information
provided to recognized stock exchange(s) and investors is not misleading.

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(d) The listed entity shall provide adequate and timely information to recognized stock
exchange(s) and investors.
(e) The listed entity shall ensure that disseminations made under provisions of these
regulations and circulars made thereunder, are adequate, accurate, explicit, timely and
presented in a simple language.
(f) Channels for disseminating information shall provide for equal, timely and cost efficient
access to relevant information by investors.
(g) The listed entity shall abide by all the provisions of the applicable laws including the
securities laws and also such other guidelines as may be issued from time to time by the
Board and the recognized stock exchange(s) in this regard and as may be applicable.
(h) The listed entity shall make the specified disclosures and follow its obligations in letter
and spirit taking into consideration the interest of all stakeholders.
(i) Filings, reports, statements, documents and information which are event based or are filed
periodically shall contain relevant information.
(j) Periodic filings, reports, statements, documents and information reports shall contain
information that shall enable investors to track the performance of a listed entity over regular
intervals of time and shall provide sufficient information to enable investors to assess the
current status of a listed entity.
Corporate Governance Principles
Regulation 4(2) of SEBI (LODR) Regulations 2015
(a) Rights of Shareholders
(i) right to participate in, and to be sufficiently informed of, decisions concerning
fundamental corporate changes.
(ii) opportunity to participate effectively and vote in general shareholder meetings.

33
(iii)being informed of the rules, including voting procedures that govern general
shareholder meetings.
(iv)opportunity to ask questions to the board of directors, to place items on the agenda of
general meetings, and to propose resolutions, subject to reasonable limitations.
(v) Effective shareholder participation in key corporate governance decisions, such as the
nomination and election of members of board of directors.
(vi)exercise of ownership rights by all shareholders, including institutional investors.
(vii) adequate mechanism to address the grievances of the shareholders.
(viii) protection of minority shareholders from abusive actions by, or in the interest of,
controlling shareholders acting either directly or indirectly, and effective means of
redress.
(b) Timely Information
According to Regulation 4(2)(b), the listed entity shall provide adequate and timely
information to shareholders, including but not limited to the following:
(i) sufficient and timely information concerning the date, location and agenda of general
meetings, as well as full and timely information regarding the issues to be discussed at
the meeting.
(ii) Capital structures and arrangements that enable certain shareholders to obtain a
degree of control disproportionate to their equity ownership.
(iii) rights attached to all series and classes of shares, which shall be disclosed to
investors before they acquire shares.

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(c) Equitable treatment
(i) All shareholders of the same series of a class shall be treated equally.
(ii) Effective shareholder participation in key corporate governance decisions, such as the
nomination and election of members of board of directors, shall be facilitated.
(iii)Exercise of voting rights by foreign shareholders shall be facilitated.
(iv)The listed entity shall devise a framework to avoid insider trading and abusive self-
dealing.
(v) Processes and procedures for general shareholder meetings shall allow for equitable
treatment of all shareholders.
(vi)Procedures of listed entity shall not make it unduly difficult or expensive to cast
votes.
(d) Role of Stakeholders in Corporate Governance
The listed entity shall recognize the rights of its stakeholders and encourage co-operation
between listed entity and the stakeholders as per Regulation 4(2)(d), in the following
manner:
(i) The listed entity shall respect the rights of stakeholders that are established by law or
through mutual agreements.
(ii) Stakeholders shall have the opportunity to obtain effective redress for violation of
their rights.

35
(iii)Stakeholders shall have access to relevant, sufficient and reliable information on a
timely and regular basis to enable them to participate in corporate governance process.
(iv)The listed entity shall devise an effective whistle blower mechanism enabling
stakeholders, including individual employees and their representative bodies, to freely
communicate their concerns about illegal or unethical practices.
(e) Disclosure and transparency
The listed entity shall ensure timely and accurate disclosure on all material matters
including the financial situation, performance, ownership, and governance of the listed
entity according to Regulation 4(2)(e), in the following manner:
(i) Information shall be prepared and disclosed in accordance with the prescribed
standards of accounting, financial and non-financial disclosure.
(ii) Channels for disseminating information shall provide for equal, timely and cost
efficient access to relevant information by users.
(iii) Minutes of the meeting shall be maintained explicitly recording dissenting opinions,
if any.
(f) Responsibilities of the board of directors
The board of directors of the listed entity shall, according to Regulation 4(2)(f) have the
following responsibilities:
Disclosure of information
(1) It is the responsibility of the Members of board of directors and key managerial
personnel to disclose to the board of directors whether they, directly, indirectly, or on
behalf of third parties, have a material interest in any transaction or matter directly
affecting the listed entity.

36
(2) The board of directors and senior management shall conduct themselves so as to meet
the expectations of operational transparency to stakeholders while at the same time
maintaining confidentiality of information in order to foster a culture of good decision-
making.
Key functions of the board of directors
(1) Reviewing and guiding corporate strategy, major plans of action, risk policy, annual
budgets and business plans, setting performance objectives, monitoring implementation
and corporate performance, and overseeing major capital expenditures, acquisitions and
divestments.
(2) Monitoring the effectiveness of the listed entity‘s governance practices and making
changes as needed.
(3) Selecting, compensating, monitoring and, when necessary, replacing key managerial
personnel and overseeing succession planning.
(4) Aligning key managerial personnel and remuneration of board of directors with the
longer-term interests of the listed entity and its shareholders.
(5) Ensuring a transparent nomination process to the board of directors with the diversity
of thought, experience, knowledge, perspective and gender in the board of directors.
(6) Monitoring and managing potential conflicts of interest of management, members of
the board of directors and shareholders, including misuse of corporate assets and abuse in
related party transactions.
(7) Ensuring the integrity of the listed entity‘s accounting and financial reporting
systems, including the independent audit, and that appropriate systems of control are in
place, in particular, systems for risk management, financial and operational control, and
compliance with the law and relevant standards.

37
(8) Overseeing the process of disclosure and communications.
(9) Monitoring and reviewing board of director‘s evaluation framework.
Other responsibilities:
(1) strategic guidance -The board of directors shall provide strategic guidance to the
listed entity, ensure effective monitoring of the management and shall be accountable to
the listed entity and the shareholders.
(2) corporate culture and the values -The board of directors shall set a corporate culture
and the values by which executives throughout a group shall behave.
(3) Act in good faith- Members of the board of directors shall act on a fully informed
basis, in good faith, with due diligence and care, and in the best interest of the listed
entity and the shareholders.
(4) Training to existing directors- The board of directors shall encourage continuing
directors training to ensure that the members of board of directors are kept up to date.
(5) Fair treatment- Where decisions of the board of directors may affect different
shareholder groups differently, the board of directors shall treat all shareholders fairly.
(6) High ethical standards- The board of directors shall maintain high ethical standards
and shall take into account the interests of stakeholders.
(7) Independent judgement- The board of directors shall exercise objective independent
judgement on corporate affairs.

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(8) Conflict of interest- The board of directors shall consider assigning a sufficient
number of non-executive members of the board of directors capable of exercising
independent judgement to tasks where there is a potential for conflict of interest.
(9) The board of directors shall ensure that, while rightly encouraging positive thinking,
these do not result in over-optimism that either leads to significant risks not being
recognized or exposes the listed entity to excessive risk.
(10) Step back- The board of directors shall have ability to ‗step back‘ to assist executive
management by challenging the assumptions underlying: strategy, strategic initiatives
(such as acquisitions), risk appetite, exposures and the key areas of the listed entity‘s
focus.
(11) When committees of the board of directors are established, their mandate,
composition and working procedures shall be well defined and disclosed by the board of
directors.
(12) Commitment- Members of the board of directors shall be able to commit
themselves effectively to their responsibilities.
(13) Access to accurate, relevant and timely information- In order to fulfil their
responsibilities, members of the board of directors shall have access to accurate, relevant
and timely information.
(14) Facilitating the performance of independent directors- The board of directors
and senior management shall facilitate the independent directors to perform their role
effectively as a member of the board of directors and also a member of a committee of
board of directors.
Note: In case of any ambiguity or incongruity between the principles and relevant
regulations, the principles specified in this Chapter shall prevail.

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Other corporate governance requirements
As per Regulation 27(1) of SEBI (LODR) Regulations 2015, The listed entity may, at its
discretion, comply with the discretionary requirements as specified in Part E of Schedule
II of the SEBI (LODR) Regulations 2015. The listed entity shall submit a quarterly
compliance report on corporate governance in the format as specified by the Board from
time to time to the recognized stock exchange(s) within fifteen days from close of the
quarter. Details of all material transactions with related parties shall be disclosed along
with this report which shall be signed either by the compliance officer or the chief
executive officer of the listed entity.
Extract of PART E: DISCRETIONARY REQUIREMENTS is as follows:
A. The Board A non-executive chairperson may be entitled to maintain a chairperson's
office at the listed entity's expense and also allowed reimbursement of expenses incurred
in performance of his duties.
B. Shareholder Rights A half-yearly declaration of financial performance including
summary of the significant events in last six-months, may be sent to each household of
shareholders.
C. Modified opinion(s) in audit report The listed entity may move towards a regime of
financial statements with unmodified audit opinion.
D. Reporting of internal auditor The internal auditor may report directly to the audit
committee.
B. Board of Directors
Composition
As per Regulation 17(1) of SEBI (LODR) Regulations, 2015, the composition of board of
directors of the listed entity shall be as follows:

40
o board of directors shall have an optimum combination of executive and
nonexecutive directors
o the board should have at least 1-woman director
o not less than 50 % of the board of directors shall comprise of non-executive
directors;
o the Board of directors of the top 500 listed entities shall have at least one
independent woman director by April 1, 2019 and the Board of directors of the
top 1000 listed entities shall have at least one independent woman director by
April 1, 2020;
o where the chairperson of the board of directors is a non-executive director, at least
1/3rd of the board of directors shall comprise of independent directors and where
the listed entity does not have a regular non-executive chairperson, at least ½ of
the board of directors shall comprise of independent directors. Provided that
where the regular non-executive chairperson is a promoter of the listed entity or is
related to any promoter or person occupying management positions at the level of
board of director or at one level below the board of directors, at least half of the
board of directors of the listed entity shall consist of independent directors.
o The board of directors of the top 1000 listed entities (with effect from April 1,
2019) and the top 2000 listed entities (with effect from April 1, 2020) shall
comprise of not less than six directors.
o where the listed company has outstanding SR equity shares, at least half of the
board of directors shall comprise of independent directors.
o No listed entity shall appoint a person or continue the directorship of any person
as a non-executive director who has attained the age of seventy five years unless a
special resolution is passed to that effect, in which case the explanatory statement
annexed to the notice for such motion shall indicate the justification for
appointing such a person.
o With effect from April 1, 2022, the top 500 listed entities shall ensure that the
Chairperson of the board of such listed entity shall - (a) be a non-executive
director; (b) not be related to the Managing Director or the Chief Executive
Officer as per the definition of the term ―relative‖ defined under the Companies

41
Act, 2013. Provided that this sub-regulation shall not be applicable to the listed
entities which do not have any identifiable promoters as per the shareholding
pattern filed with stock exchanges.
Maximum number of Directorships
As per Regulation 17A of SEBI (LODR) Regulations, 2015, the directors of listed
entities shall comply with the following conditions with respect to the maximum number
of directorships, including any alternate directorships that can be held by them at any
point of time -
(1) A person shall not be a director in more than eight listed entities with effect from
April 1, 2019 and in not more than seven listed entities with effect from April 1, 2020.
Provided that a person shall not serve as an independent director in more than seven
listed entities.
(2) Notwithstanding the above, any person who is serving as a whole time director /
managing director in any listed entity shall serve as an independent director in not more
than three listed entities.
The count for the number of listed entities on which a person is a director / independent
director shall be only those whose equity shares are listed on a stock exchange.
Corporate Governance Provisions to be complied by the Board of Directors
o The board of directors shall meet at least four times a year, with a maximum time
gap of one hundred and twenty days between any two meetings.
o The quorum for every meeting of the board of directors of the top 1000 listed
entities with effect from April 1, 2019 and of the top 2000 listed entities with

42
effect from April 1, 2020 shall be 1/3rd of its total strength or 3 directors,
whichever is higher, including at least one independent director.
o The participation of the directors by video conferencing or by other audio-visual
means shall also be counted for the purposes of such quorum.
o The board of directors shall periodically review compliance reports pertaining to
all laws applicable to the listed entity, prepared by the listed entity as well as steps
taken by the listed entity to rectify instances of non-compliances.
o The board of directors of the listed entity shall satisfy itself that plans are in place
for orderly succession for appointment to the board of directors and senior
management.
o The board of directors shall lay down a code of conduct for all members of board
of directors and senior management of the listed entity. The code of conduct shall
suitably incorporate the duties of independent directors as laid down in the
Companies Act, 2013.
o The board of directors shall recommend all fees or compensation, if any, paid to
non-executive directors, including independent directors and shall require
approval of shareholders in general meeting. The approval shall specify the limits
for the maximum number of stock options that may be granted to non-executive
directors, in any financial year and in aggregate. The approval of shareholders by
special resolution shall be obtained every year, in which the annual remuneration
payable to a single non-executive director exceeds 50% of the total annual
remuneration payable to all non-executive directors, giving details of the
remuneration thereof
o The requirement of obtaining approval of shareholders in general meeting shall
not apply to payment of sitting fees to non-executive directors, if made within the
limits prescribed under the Companies Act, 2013 for payment of sitting fees
without approval of the Central Government.
o Independent directors shall not be entitled to any stock option.
o The fees or compensation payable to executive directors who are promoters or
members of the promoter group, shall be subject to the approval of the
shareholders by special resolution in general meeting, if- (i) the annual

43
remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per
cent of the net profits of the listed entity, whichever is higher; or (ii) where there
is more than one such director, the aggregate annual remuneration to such
directors exceeds 5 per cent of the net profits of the listed entity:
o The minimum information to be placed before the board of directors is specified
in Part A of Schedule II of the SEBI (LODR) Regulations, 2015.
o The chief executive officer and the chief financial officer shall provide the
compliance certificate to the board of directors as specified in Part B of Schedule
II of the SEBI (LODR) Regulations, 2015.
o The listed entity shall lay down procedures to inform members of board of
directors about risk assessment and minimization procedures.
o The board of directors shall be responsible for framing, implementing and
monitoring the risk management plan for the listed entity.
o The evaluation of independent directors shall be done by the entire board of
directors which shall include (a) performance of the directors; and (b) fulfillment
of the independence criteria as specified in these regulations and their
independence from the management. In this evaluation, the directors who are
subject to evaluation shall not participate.
Obligations with respect to employees including senior management, key
managerial persons, directors and promoters
As per Regulation 26 of SEBI (LODR) Regulations, 2015:
(1) A director shall not be a member in more than ten committees or act as chairperson of
more than five committees across all listed entities in which he is a director which shall
be determined as follows:
(a) the limit of the committees on which a director may serve in all public limited
companies, whether listed or not, shall be included and all other companies including
private limited companies, foreign companies and companies under Section 8 of the
Companies Act, 2013 shall be excluded;

44
(b) for the purpose of determination of limit, chairpersonship and membership of the
audit committee and the Stakeholders' Relationship Committee alone shall be considered.
(2) Every director shall inform the listed entity about the committee positions he or she
occupies in other listed entities and notify changes as and when they take place.
(3) All members of the board of directors and senior management personnel shall affirm
compliance with the code of conduct of board of directors and senior management on an
annual basis.
(4) Non-executive directors shall disclose their shareholding, held either by them or on a
beneficial basis for any other persons in the listed entity in which they are proposed to be
appointed as directors, in the notice to the general meeting called for appointment of such
director.
(5) Senior management shall make disclosures to the board of directors relating to all
material, financial and commercial transactions, where they have personal interest that
may have a potential conflict with the interest of the listed entity at large.
Explanation. - For the purpose of this sub-regulation, conflict of interest relates to dealing
in the shares of listed entity, commercial dealings with bodies, which have shareholding
of management and their relatives etc.
(6) No employee including key managerial personnel or director or promoter of a listed
entity shall enter into any agreement for himself or on behalf of any other person, with
any shareholder or any other third party with regard to compensation or profit sharing in
connection with dealings in the securities of such listed entity, unless prior approval for
the same has been obtained from the Board of Directors as well as public shareholders by
way of an ordinary resolution:
Provided that such agreement, if any, whether subsisting or expired, entered during the
preceding three years from the date of coming into force of this sub-regulation, shall be
disclosed to the stock exchanges for public dissemination:
Provided further that subsisting agreement, if any, as on the date of coming into force of
this sub-regulation shall be placed for approval before the Board of Directors in the
forthcoming Board meeting:

45
Provided further that if the Board of Directors approve such agreement, the same shall be
placed before the public shareholders for approval by way of an ordinary resolution in the
forthcoming general meeting:
Provided further that all interested persons involved in the transaction covered under the
agreement shall abstain from voting in the general meeting.
Explanation - For the purposes of this sub-regulation, ‗interested person‘ shall mean any
person holding voting rights in the listed entity and who is in any manner, whether
directly or indirectly, interested in an agreement or proposed agreement, entered into or
to be entered into by such a person or by any employee or key managerial personnel or
director or promoter of such listed entity with any shareholder or any other third party
with respect to compensation or profit sharing in connection with the securities of such
listed entity
C. Independent Director
As per Regulation 16(1)(b) of SEBI (LODR) Regulations, 2015:
"independent director" means a non-executive director, other than a nominee director of
the listed entity:
(i) who, in the opinion of the board of directors, is a person of integrity and possesses
relevant expertise and experience;
(ii) who is or was not a promoter of the listed entity or its holding, subsidiary or associate
company or member of the promoter group of the listed entity;
(iii) who is not related to promoters or directors in the listed entity, its holding, subsidiary
or associate company;
(iv) who, apart from receiving director's remuneration, has or had no material pecuniary
relationship with the listed entity, its holding, subsidiary or associate company, or their
promoters, or directors, during the two immediately preceding financial years or during
the current financial year;
(v) none of whose relatives has or had pecuniary relationship or transaction with the
listed entity, its holding, subsidiary or associate company, or their promoters, or directors,
amounting to two per cent. or more of its gross turnover or total income or fifty lakh

46
rupees or such higher amount as may be prescribed from time to time, whichever is
lower, during the two immediately preceding financial years or during the current
financial year;
(vi) who, neither himself, nor whose relative(s) —
(A) holds or has held the position of a key managerial personnel or is or has been an
employee of the listed entity or its holding, subsidiary or associate company in any of the
three financial years immediately preceding the financial year in which he is proposed to
be appointed;
(B) is or has been an employee or proprietor or a partner, in any of the three financial
years immediately preceding the financial year in which he is proposed to be appointed,
of —
(1) a firm of auditors or company secretaries in practice or cost auditors of the listed
entity or its holding, subsidiary or associate company; or
(2) any legal or a consulting firm that has or had any transaction with the listed entity, its
holding, subsidiary or associate company amounting to ten per cent or more of the gross
turnover of such firm;
(C) holds together with his relatives two per cent or more of the total voting power of the
listed entity; or
(D) is a chief executive or director, by whatever name called, of any non-profit
organization that receives twenty-five per cent or more of its receipts or corpus from the
listed entity, any of its promoters, directors or its holding, subsidiary or associate
company or that holds two per cent or more of the total voting power of the listed entity;
(E) is a material supplier, service provider or customer or a lessor or lessee of the listed
entity;
(vii)who is not less than 21 years of age.
(viii) who is not a non-independent director of another company on the board of which
any non-independent director of the listed entity is an independent director
Number and Tenure of Independent Directors
As per Regulation 25(1) of the SEBI (Listing Obligation and Disclosure Requirement)
Regulations, 2015, No person shall be appointed or continue as an alternate director for

47
an independent director of a listed entity with effect from October 1, 2018. As per
Regulation 25(2) of the SEBI (Listing Obligation and Disclosure Requirement)
Regulations, 2015, the maximum tenure of independent directors shall be in accordance
with the Companies Act, 2013 and rules made thereunder, in this regard, from time to
time.
Meeting of Independent Directors
Regulations, 2015, the independent directors of the listed entity shall hold at least one
meeting in a year, without the presence of non-independent directors and members of the
management and all the independent directors shall strive to be present at such meeting.
Proceedings at the meeting of Independent Directors
As prescribed under Regulation 25(4) of the SEBI (Listing Obligation and Disclosure
Requirement) Regulations, 2015, the independent directors shall inter alia-
(a) review the performance of non-independent directors and the board of directors as a
whole;
(b) review the performance of the chairperson of the listed entity, taking into account the
views of executive directors and non-executive directors;
(c) assess the quality, quantity and timeliness of flow of information between the
management of the listed entity and the board of directors that is necessary for the board
of directors to effectively and reasonably perform their duties.
Liability of the Independent Director
Regulations, 2015 prescribes that an independent director shall be held liable, only in
respect of such acts of omission or commission by the listed entity which had occurred
with his knowledge, attributable through processes of board of directors, and with his
consent or connivance or where he had not acted diligently with respect to the provisions
contained in these regulations.

48
Resignation of Independent Directors
Regulations, 2015, An independent director who resigns or is removed from the board of
directors of the listed entity shall be replaced by a new independent director by listed
entity at the earliest but not later than the immediate next meeting of the board of
directors or three months from the date of such vacancy, whichever is later.
It also provides that where the listed entity fulfils the requirement of independent
directors in its board of directors without filling the vacancy created by such resignation
or removal, the requirement of replacement by a new independent director shall not
apply.
Familiarization Program for Independent Director
Regulations, 2015 states that the Listed Entity shall familiarize the independent directors
with the Listed Entity, nature of the industry in which the Listed Entity operates, their
roles, rights, responsibilities in the Listed Entity, business model of the Listed Entity, etc.
Declaration of Criteria of Independence
Every independent director shall, at the first meeting of the board in which he participates
as a director and thereafter at the first meeting of the board in every financial year or
whenever there is any change in the circumstances which may affect his status as an
independent director, submit a declaration that he meets the criteria of independence as
provided in Regulation 16(1)(b) of the SEBI (Listing Obligation and Disclosure
Requirement) Regulations, 2015 and that he is not aware of any circumstance or
situation, which exist or may be reasonably anticipated, that could impair or impact his
ability to discharge his duties with an objective independent judgment and without any
external influence.
The board of directors of the listed entity shall take on record the declaration and
confirmation submitted by the independent director after undertaking due assessment of
the veracity of the same.

49
With effect from October 1, 2018, the top 500 listed entities by market capitalization
calculated as on March 31 of the preceding financial year, shall undertake Directors and
Officers insurance (‗D and O insurance‘) for all their independent directors of such
quantum and for such risks as may be determined by its board of directors
D. Code of Conduct of Board of Directors & Senior Management
Regulations, 2015 provides that the board of directors shall lay down a code of conduct
for all members of board of directors and senior management of the listed entity. The
code of conduct shall be posted on the website of the Listed Entity.
The code of conduct shall suitably incorporate the duties of independent directors as laid
down in the Companies Act, 2013.
E. Board Committees
1. Audit Committee
As per Regulation 18 of the SEBI (Listing Obligation and Disclosure Requirement)
Regulations, 2015, Every listed entity shall set up a qualified and independent audit
committee in accordance with the terms of reference, subject to the following:
(a) The audit committee shall have minimum three directors as members.
(b) Two-thirds of the members of audit committee shall be independent directors and in
case of a listed entity having outstanding SR equity shares, the audit committee shall only
comprise of independent directors.
(c) All members of audit committee shall be financially literate and at least one member
shall have accounting or related financial management expertise.
(d) The chairperson of the audit committee shall be an independent director and he shall
be present at Annual general meeting to answer shareholder queries.
(e) The Company Secretary shall act as the secretary to the audit committee.
2. Nomination and remuneration committee

50
Regulations, 2015, The Listed Entity through its Board of directors shall constitute the
nomination and remuneration committee which shall comprise at least 3 directors, all of
whom shall be non-executive directors and at least half shall be independent and in case
of a listed entity having outstanding SR equity shares, two thirds of the nomination and
remuneration committee shall comprise of independent directors.
3. Stakeholders Relationship Committee
Regulations, 2015, the listed entity shall constitute a Stakeholders Relationship
Committee to specifically look into various aspects of interest of shareholders, debenture
holders and other security holders.
4. Risk Management Committee
Regulations, 2015, The board of directors shall constitute a Risk Management
Committee. The majority of members of Risk Management Committee shall consist of
members of the board of directors and in case of a listed entity having outstanding SR
equity shares, at least two thirds of the Risk Management Committee shall comprise of
independent directors.
F. Vigil mechanism
Regulations, 2015, the listed entity shall formulate a vigil mechanism for directors and
employees to report genuine concerns.
The vigil mechanism shall provide for adequate safeguards against victimization of
director(s) or employee(s) or any other person who avail the mechanism and also provide
for direct access to the chairperson of the audit committee in appropriate or exceptional
cases.
G. Related Party Transactions

51
Related Party is defined under Regulation 2(zb) of the SEBI (Listing Obligation and
Disclosure Requirement) Regulations, 2015, which means a related party as defined
under sub-section (76) of section 2 of the Companies Act, 2013 or under the applicable
accounting standards. Provided that any person or entity belonging to the promoter or
promoter group of the listed entity and holding 20% or more of shareholding in the listed
entity shall be deemed to be a related party.
Related party transaction under Regulation 2(zc) of the SEBI (Listing Obligation and
Disclosure Requirement) Regulations, 2015, means a transfer of resources, services or
obligations between a listed entity and a related party, regardless of whether a price is
charged and a "transaction" with a related party shall be construed to include a single
transaction or a group of transactions in a contract.
Regulations, 2015:
1. The listed entity shall formulate a policy on materiality of related party transactions
and on dealing with related party transactions including clear threshold limits duly
approved by the board of directors and such policy shall be reviewed by the board of
directors at least once every three years and updated accordingly.
2. Notwithstanding the above, with effect from July 01, 2019 a transaction involving
payments made to a related party with respect to brand usage or royalty shall be
considered material if the transaction(s) to be entered into individually or taken together
with previous transactions during a financial year, exceed 5% of the annual consolidated
turnover of the listed entity as per the last audited financial statements of the listed entity
3. All related party transactions shall require prior approval of the audit committee
Omnibus approval for related party transactions
Audit committee may grant omnibus approval for related party transactions proposed to
be entered into by the listed entity subject to the following conditions, namely-

52
(a) the audit committee shall lay down the criteria for granting the omnibus approval in
line with the policy on related party transactions of the listed entity and such approval
shall be applicable in respect of transactions which are repetitive in nature;
(b) the audit committee shall satisfy itself regarding the need for such omnibus approval
and that such approval is in the interest of the listed entity;
(c) the omnibus approval shall specify
(i) the name(s) of the related party, nature of transaction, period of transaction, maximum
amount of transactions that shall be entered into,
(ii) the indicative base price / current contracted price and the formula for variation in the
price if any; and
(iii) such other conditions as the audit committee may deem fit:
Provided that where the need for related party transaction cannot before seen and
aforesaid details are not available, audit committee may grant omnibus approval for such
transactions subject to their value not exceeding rupees one crore per transaction.
(d) the audit committee shall review, at least on a quarterly basis, the details of related
party transactions entered into by the listed entity pursuant to each of the omnibus
approvals given.
(e) Such omnibus approvals shall be valid for a period not exceeding one year and shall
require fresh approvals after the expiry of one year.
H. Subsidiary of listed entity
(1) At least one independent director on the board of directors of the listed entity shall be
a director on the board of directors of an unlisted material subsidiary, whether
incorporated in India or not.
(2) The audit committee of the listed entity shall also review the financial statements, I
particular, the investments made by the unlisted subsidiary.
(3) The minutes of the meetings of the board of directors of the unlisted subsidiary shall
be placed at the meeting of the board of directors of the listed entity.
(4) The management of the unlisted subsidiary shall periodically bring to the notice of the
board of directors of the listed entity, a statement of all significant transactions and
arrangements entered into by the unlisted subsidiary.

53
(5) A listed entity shall not dispose of shares in its material subsidiary resulting in
reduction of its shareholding (either on its own or together with other subsidiaries) to less
than fifty percent or cease the exercise of control over the subsidiary without passing a
special resolution in its General Meeting except in cases where such divestment is made
under a scheme of arrangement duly approved by a Court/Tribunal, , or under a
resolution plan duly approved under section 31 of the Insolvency Code and such an event
is disclosed to the recognized stock exchanges within one day of the resolution plan being
approved
(6) Selling, disposing and leasing of assets amounting to more than twenty percent
of the assets of the material subsidiary on an aggregate basis during a financial year shall
require prior approval of shareholders by way of special resolution, unless the
sale/disposal/lease is made under a scheme of arrangement duly approved by a
Court/Tribunal, or under a resolution plan duly approved under section 31 of the
Insolvency Code and such an event is disclosed to the recognized stock exchanges within
one day of the resolution plan being approved
(7) Where a listed entity has a listed subsidiary, which is itself a holding company, the
provisions of this regulation shall apply to the listed subsidiary in so far as its subsidiaries
are concerned.
I. Disclosures
1. Prior Intimations
Regulations, 2015, the listed entity shall give prior intimation to stock exchange about the
meeting of the board of directors in the following manner-
A. At least two working days in advance, excluding the date of the intimation and date of
the meeting in which any of the following proposals is due to be considered-
 proposal for buyback of securities;
 proposal for voluntary delisting by the listed entity from the stock exchange(s);
 fund raising by way of further public offer, rights issue, American Depository
Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds,
qualified institutions placement, debt issue, preferential issue or any other method

54
and for determination of issue price. Provided that intimation shall also be given
in case of any annual general meeting or extraordinary general meeting or postal
ballot that is proposed to be held for obtaining shareholder approval for further
fund raising indicating type of issuance
 declaration/recommendation of dividend, issue of convertible securities including
convertible debentures or of debentures carrying a right to subscribe to equity
shares or the passing over of dividend.
 the proposal for declaration of bonus securities where such proposal is
communicated to the board of directors of the listed entity as part of the agenda
papers.
B. At least five days in advance excluding the date of the intimation and date of the
meeting in which following proposal is due to be considered-,
 financial results viz. quarterly, half yearly, or annual, as the case may be;
and such intimation shall include the date of such meeting of board of directors
C. At least eleven working days before any of the following proposal is placed before the
board of directors -
 any alteration in the form or nature of any of its securities that are listed on the
stock exchange or in the rights or privileges of the holders thereof.
 any alteration in the date on which, the interest on debentures or bonds, or the
redemption amount of redeemable shares or of debentures or bonds, shall be
payable.
2. Disclosure of Material Events
Regulations, 2015, every listed entity shall make disclosures of material events specified
in Para A of Part A of Schedule III of the Regulations.
3. Disclosures of events upon application of the Materiality Guidelines

55
As per Regulation (4) of the SEBI (Listing Obligation and Disclosure Requirement)
Regulations, 2015, the listed entity shall frame a policy for determination of materiality
of events/information, approved by the board of directors and which shall be disclosed on
its website on the basis of following criteria-
(a) the omission of an event or information, which is likely to result in discontinuity or
alteration of event or information already available publicly; or
b) the omission of an event or information is likely to result in significant market reaction
if the said omission came to light at a later date; or
c) an event/information may be treated as being material if in the opinion of the board of
directors of listed entity, the event / information is considered material.
Events which shall be disclosed upon application of the guidelines for materiality
referred sub-regulation (4) of regulation (30) prescribed under Para B of Part A of
Schedule III-
1. Commencement or any postponement in the date of commencement of commercial
production or commercial operations of any unit/division.
2. Change in the general character or nature of business brought about by arrangements
for strategic, technical, manufacturing, or marketing tie-up, adoption of new lines of
business or closure of operations of any unit/division (entirety or piecemeal).
3. Capacity addition or product launch.
4. Awarding, bagging/ receiving, amendment or termination of awarded/bagged
orders/contracts not in the normal course of business.
5. Agreements (viz. loan agreement(s) (as a borrower) or any other agreement(s) which
are binding and not in normal course of business) and revision(s) or amendment(s) or
termination(s) thereof.
6. Disruption of operations of any one or more units or division of the listed entity due to
natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes,
lockouts etc.
7. Effect(s) arising out of change in the regulatory framework applicable to the listed
entity

56
8. Litigation(s) / dispute(s) / regulatory action(s) with impact.
9. Fraud/defaults etc. by directors (other than key managerial personnel) or employees of
listed entity.
10. Options to purchase securities including any ESOP/ESPS Scheme.
11. Giving of guarantees or indemnity or becoming a surety for any third party.
12. Granting, withdrawal, surrender, cancellation or suspension of key licenses or
regulatory approvals.
4. Disclosure of Financial Results
Regulations, 2015, the listed entity shall make the disclosures specified in Part A of
Schedule IV.
A. Changes in accounting policies, if any, shall be disclosed in accordance with
Accounting Standard 5 or Indian Accounting Standard 8, as applicable, specified in
Section 133 of the Companies Act, 2013 read with relevant rules framed thereunder or by
the Institute of Chartered Accountants of India, whichever is applicable.
B. If the auditor has expressed any modified opinion(s) in respect of audited financial
results submitted or published under this para, the listed entity shall disclose such
modified opinion(s) and cumulative impact of the same on profit or loss, net worth, total
assets, turnover/total income, earning per share, total expenditure, total liabilities or any
other financial item(s) which may be impacted due to modified opinion(s), while
publishing or submitting such results.
BA. If the auditor has expressed any modified opinion(s), the management of the listed
entity has the option to explain its views on the audit qualifications and the same shall be
included in the Statement on Impact of Audit Qualifications (for audit report with
modified opinion).
BB. With respect to audit qualifications where the impact of the qualification is not
quantifiable:
i. The management shall make an estimate and the auditor shall review the same and
report accordingly; or

A to Z of Corporate Governance|Adv Dr. Rajkumar Adukia

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