Recent Amendments in Listing Agreement
Consequent to the enactment of Companies Act, 2013, Securities and Exchange Board of India (SEBI) has announced some amendments in the listing agreement vide its Circular Number CIR/CFD/POLICY CELL/2/2014 dated 17th April, 2014.
More specifically, amendments have been made to Clause 35B and 49 of the listing agreement with the objective to align the listing agreement with the provisions of the Companies Act, 2013, to adopt best practices on corporate governance and to make the corporate governance framework more effective.
In this article we have given a highlight of the changes made in the listing agreement vide the above SEBI circular and their impact on listed entities.
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HIGHLIGHTS OF AMENDMENTS MADE IN CLAUSE 35B
Amended Clause 35B is applicable from the date of circular i.e. 17.04.2014
E-voting facility needs to be provided in respect of all shareholders’ resolutions to be passed at General Meetings or through postal ballot.
E-voting facility shall be kept open for such period specified under the Companies (Management and Administration) Rules, 2014 i.e. minimum 1 day and maximum 3 days in case of general meeting. For Postal ballot share holders are required to communicate their assent or dissent within 30 days of dispatch of notice.
Companies need to continue to provide the facility of voting in writing on a postal ballot as per the provisions of the Companies (Management and Administration) Rules, 2014 to those shareholders who do not have access to e-voting facility.
Companies are required to utilize the service of any one of the agencies providing e-voting platform, which is in compliance with conditions specified by the Ministry of Corporate Affairs, Government of India, from time to time.
Companies are required to mention the Internet link of such e-voting platform in the notice to their shareholders
HIGHLIGHTS OF AMENDMENTS MADE IN CLAUSE 49
Applicability
The revised Clause 49 would be applicable to all listed companies with effect from October 01, 2014.
The provisions of Clause 49(VI)(C) shall be applicable to top 100 listed companies by market capitalisation as at the end of the immediate previous financial year.
The provisions of Clause 49(VII) shall be applicable to all prospective transactions. All existing material related party contracts or arrangements as on the date of this circular which are likely to continue beyond March 31, 2015 shall be placed for approval of the shareholders in the first General Meeting subsequent to October 01, 2014. However, a company may choose to get such contracts approved by the shareholders even before October 01, 2014.