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: 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 NSE and 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. The list means the admission of securities to trading on a recognized exchange. The Separate Rating Department authorizes the listing of corporate securities by the provisions of the Securities Contracts (Regulation) Act of 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 2013, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of the Exchange. Companies enter into a list agreement with the stock exchange and provide certain information and perform certain actions. Listing Department monitors business compliance. These amendments are a mixture of clarifications and relaxations of corporate governance requirements, in accordance with Article 49 of the listing agreements. The communication between SEBI and large companies highlighted the difficulties that prevailed with regard to the interpretation and recognition of problematic areas under the clause.
This is a welcome change, taking into account the practicality of implementing corporate governance rules. These amendments bring section 49 of the listing agreement in line with the Companies Act 2013, but do not fully pave the way for smooth implementation. The alignment of a definition of “related parties” and the raising of the threshold for determining the size of transactions with individuals related to 10% of annual consolidated revenue and the approval of bus and coach authorizations were urgent changes. As a result of this amendment, section 49 defined the principles of corporate governance.