Article 49 of the SEBI Corporate Governance Guidelines in the amended version of October 10, 2004 significantly changed the definition of independent directors, strengthened the competence of audit committees, improved the quality of financial information, including transactions with related parties, and the returns on public/rights/preference issues that require boards of directors to adopt a formal code of conduct, require ceo/CFO validation of accounts, and improve shareholder advertising. Some non-binding clauses, such as whistleblower policy and the limitation of the mandate of independent directors, were also included.  To comply with section 49, paragraph 1, a company must adhere to certain principles. (b) of all companies that have been required to meet the requirement of the proposed Clause 49 for review, i.e. all listed companies with a freed capital of 3 crores or more or a net asset of 25 kronor or more at any time in the company`s history. Companies are required to meet the requirements of the clause on March 31, 2004 or before March 31, 2004. The term “clause 49″ refers to clause 49 of the listing agreement between a company and the exchanges on which it is listed (the listing agreement is the same for all Indian exchanges, including the NSE and the BSE). This clause is a recent addition to the Listing Agreement and was not inserted until 2000 following the recommendations of the Kumarmangalam Birla Committee on Corporate Governance, established in 1999 by the Securities Exchange Board of India (SEBI). Compliance – The company receives an annual certificate of activity from a legal auditor or a business secretary practising on compliance with clause 49 of the list agreement. Section 49 of the Listing Agreement deals with comprehensive corporate governance guidelines. Below are the provisions of a company that must comply with the implementation of effective corporate governance.
Article 49 of the listing agreement applies to companies that wish to be listed on the stock market. This clause contains both binding and non-binding provisions. The main binding provisions are: “Corporate governance is about maintaining a balance between economic and social objectives, as well as between individual and local objectives. The governance framework is intended to promote the efficient use of resources and to require responsibility for the management of these resources. The aim is to coordinate the best interests of individuals, businesses and society. -Sir Adrian Cadbury, UK, Commission Report: Corporate Governance 1992 The fundamental criterion on which the entire list of agreements is based is corporate governance. Currently, there are 54 clauses in the list agreement and all on the basis of that concept.