The Hindu Business Line : Clause 49: SEBI extends deadline for compliance to Dec 31

GRANTING a nine-months breather to corporates regarding the implementation of the amendments in Clause 49 of the Listing Agreement, SEBI has postponed the deadline for conforming to the new regulation to December 31.

Briefing the press after SEBI's board meeting here today, the Chairman, Mr M. Damodaran, said, "It was felt that as of March 31, a large number of corporates would not be in a state of preparedness to fully comply with all the requirements of Clause 49".

"Clause 49 is a means to an end. It seeks to improve governance levels in Indian corporates and with that observation, it is necessary to ensure that the spirit of Clause 49 finds appropriate expression and implementation," he added.

The SEBI Board has given corporates time till December 31, to be fully compliant.

During the process of implementation of the new regulation, if any major problems arise, SEBI is willing to look at the need for making minor modifications without diluting the content of the Clause, he said.

Mr Damodaran did not specify about the differences between the new Clause 49 and the requirements of the Company Law. He said, "No changes of definitions were discussed at the meeting."

SEBI expects that during the next nine months, listed companies will identify an adequate number of independent directors and will attempt to equip them with orientation programmes in order to enable them function adequately at the board level. Corporates had earlier raised concerns about finding appropriate independent directors who qualify in the context of Clause 49.

SEBI clarified that PSUs are not being treated differently. Government officials who are on the boards of PSUs represent the majority shareholder and are not "independent".

SEBI said that it has not received any representation from PSUs about their difficulties in adhering to the new Clause 49. "PSUs will be expected to be as compliant as non-PSUs," Mr Damodaran said.

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