Crm in Hdfc Standards Life Insurance
CLAUSE 49 - AN ANALYSIS
3RD Directors’ Leadership Programme Organised by Centre for Corporate Governance Indian Institute of Management, Calcutta December 14, 2007 Dilip Kumar Sen
CLAUSE 49 OF
LISTING AGREEMENT WITH STOCK EXCHANGES
INTRODUCED BY SEBI WEF 1ST APRIL 2000 BASED ON BIRLA COMMITTEE RECOMMENDATIONS SIGNIFICANTLY REVISED FROM 1ST JANUARY 2006 BASED ON PROPOSALS OF MURTHY COMMITTEE-
CLAUSE 49 OF LISTING AGREEMENT WHICH APPLIES TO
ALL LISTED COMPANIES HAS BEEN ONE OF THE MOST TALKED ABOUT ISSUE. AFTER THE CLAUSE WAS FIRST INTRODUCED BASED ON THE PRACTICE FOLLOWED IN DEVELOPED COUNTRIES AND ALSO KEEPING IN MIND THE OECD PRINCIPLES ON CORPORATE GOVERNANCE THE CORPORATE WORLD HAS WITNESSED THE ENRON FIASCO AND THE ENACTMENT OF SARBANES OXLEY ACT IN THE USA .ARTHUR ANDERSEN THE AUDITORS OF ENRON WAS FOUND GUILTY BY THE US JURY
ENRON IS JUST AN EXAMPLE – THERE WERE MANY OTHER LARGE CORPORATES WHERE INVESTIGATIONS HAD REVEALED HOW INFLATED EARNINGS WERE REPORTED AND HOW FINANCIAL REPORTINGS WERE MANIPULATED. SOX ACT WHICH IS CONSIDERED AS A TOUGH ACT AIMED TO PLUG THE LOOPHOLES AND REQUIRED THE CORPORATES TO STRICTLY FOLLOW THE REQUIREMENTS OF THE ACT. OUR CG REQUIREMENTS HAVE BEEN REVISED KEEPING IN MIND SOME OF THE PROVISIONS OF THE SOX ACT EVEN THOUGH WE ARE SOMEWHAT LENIENT . A FLAVOUR OF A FEW ONEROUS CLAUSES OF SOX ACT ARE: 1. Section 201- List of services outside the scope of Auditors – Auditors cannot provide services such as Book keeping, financial information system design/implementation, internal audit, actuarial , valuation, investment adviser, expert srervices unrelated to audit etc. – we still do not have any such prohibition 2.SECTION 302- CEO/CFO CERTIFICATION OF FINANCIAL STATEMENTS and review of internal control system and its deficiencies
This requirement has been incorporated in clause 49 but an important requirement i.e. evaluation of the effectiveness of internal control systems as of a date within 90 days prior to the
3RD Directors’ Leadership Programme Organised by Centre for Corporate Governance Indian Institute of Management, Calcutta December 14, 2007 Dilip Kumar Sen
CLAUSE 49 OF
LISTING AGREEMENT WITH STOCK EXCHANGES
INTRODUCED BY SEBI WEF 1ST APRIL 2000 BASED ON BIRLA COMMITTEE RECOMMENDATIONS SIGNIFICANTLY REVISED FROM 1ST JANUARY 2006 BASED ON PROPOSALS OF MURTHY COMMITTEE-
CLAUSE 49 OF LISTING AGREEMENT WHICH APPLIES TO
ALL LISTED COMPANIES HAS BEEN ONE OF THE MOST TALKED ABOUT ISSUE. AFTER THE CLAUSE WAS FIRST INTRODUCED BASED ON THE PRACTICE FOLLOWED IN DEVELOPED COUNTRIES AND ALSO KEEPING IN MIND THE OECD PRINCIPLES ON CORPORATE GOVERNANCE THE CORPORATE WORLD HAS WITNESSED THE ENRON FIASCO AND THE ENACTMENT OF SARBANES OXLEY ACT IN THE USA .ARTHUR ANDERSEN THE AUDITORS OF ENRON WAS FOUND GUILTY BY THE US JURY
ENRON IS JUST AN EXAMPLE – THERE WERE MANY OTHER LARGE CORPORATES WHERE INVESTIGATIONS HAD REVEALED HOW INFLATED EARNINGS WERE REPORTED AND HOW FINANCIAL REPORTINGS WERE MANIPULATED. SOX ACT WHICH IS CONSIDERED AS A TOUGH ACT AIMED TO PLUG THE LOOPHOLES AND REQUIRED THE CORPORATES TO STRICTLY FOLLOW THE REQUIREMENTS OF THE ACT. OUR CG REQUIREMENTS HAVE BEEN REVISED KEEPING IN MIND SOME OF THE PROVISIONS OF THE SOX ACT EVEN THOUGH WE ARE SOMEWHAT LENIENT . A FLAVOUR OF A FEW ONEROUS CLAUSES OF SOX ACT ARE: 1. Section 201- List of services outside the scope of Auditors – Auditors cannot provide services such as Book keeping, financial information system design/implementation, internal audit, actuarial , valuation, investment adviser, expert srervices unrelated to audit etc. – we still do not have any such prohibition 2.SECTION 302- CEO/CFO CERTIFICATION OF FINANCIAL STATEMENTS and review of internal control system and its deficiencies
This requirement has been incorporated in clause 49 but an important requirement i.e. evaluation of the effectiveness of internal control systems as of a date within 90 days prior to the