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SEBI recently introduced a new format for compliance report on corporate governance, which has to be submitted by the listed companies to the designated stock exchanges. The circular by SEBI states the new format for disclosures to be made by such listed companies on
For your Knowledge: Listed Companies are the companies whose shares are traded or listed on an official stock exchange. It must comply with the listing requirements of that exchange.
Before moving ahead, let’s get familiar with the corporate governance and the amount of importance it holds in India
Corporate governance is a procedure that is in interest for companies based on certain structures and principles through which a company or a corporation is governed. It makes sure that the corporate works in a way that it is ultimately able to achieve the preferred goals. Further, it makes the firms accountable towards each stakeholder that may include directors, shareholders, employees, consumers, etc.
In simple words, corporate governance generally refers to practices by which an organization is controlled, directed, and administered. The primary purpose of Corporate Governance is to make such conditions where a company’s directors and the managers should have to do something on behalf of the interest of the company and its various stakeholders.
Corporate governance has an important role to play in every company or organization. The significance of Corporate Governance in a company/corporation can be explained as under:
The regulatory Frameworks on Corporate Governance which govern the Indian Corporations are:
In September 2015, SEBI had asked listed companies to submit a compliance report on corporate governance in a prescribed format with disclosures relating to the composition of the board of directors as well as the committees and their respective meetings, among others. However, the required changes were made in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to implement the recommendations of the committee on corporate governance.
SEBI has stated that the circular shall come into force from the quarter ended September 30, 2019
As per the recently introduced new format:
In the report which is required to be submitted at the end of 6 months after the end of the financial year, the status of the attendance of the chairperson of the stakeholder relationship committee at the annual general meeting requires to be stated apart from the existing disclosure requirements. The annual compliance report on corporate governance is correlated towards disclosure in terms of listing regulations.