Clause 49 Listing Agreement Essentials: What listed companies must have in place
- Restriction on the number of directorships: The maximum number of boards that an independent director can serve on listed companies is seven. If such person is serving as a whole-time director in a listed company, then he cannot serve more than three boards.
- Mandatory to have woman director: Have at least one woman director in the board
- Expanded role of Audit Committee: Audit Committee must have minimum three directors as members, and two-third of members as independent directors. The committee plays a significant role regarding the appointment and monitoring of auditors, financial reporting of the company, monitoring inter-corporate loans, related party transactions, reviewing the functioning of the whistle blower mechanism, etc.
- Compulsory whistle-blower mechanism: Vigil mechanism must provide adequate safeguards to prevent victimization of the whistle blower
- Expansion in definition of related-party transactions (RPTs): All RPTs requires prior approval of the audit committee. Even a transaction between related-parties without any charge has been included in the definition of RPT
- Tenure of independent directors: Restricts the total tenure of an independent director to two terms of 5 years each