The ministry of company affairs (MCA) is understood to have raised some objection with respect to implementation of revised Claue 49 and has already conveyed its stand on the issue to the regulator.
Listing agreement is a tool in the hands of the market regulator to enforce corporate governance rules. MCA secretary Komal Anand is a part-time member on the Sebi board and she is expected to raise the issue at Wednesdays board meeting, sources said.
The revised clause 49 pertains to some important changes that will come into force from April 1, 2005. This includes making chief executive officers (CEOs) and chief financial officers (CFOs) fully accountable for any financial statement. The other change is with respect to appointment of independent directors.
The MCAs objection to the proposed change in Clause 49 stems from the fact that it has also set up a committee to suggest changes in the Companies Act, under the chairmanship of Dr JJ Irani, former chairman of Tata Steel. Sources said that as the Irani panel report is expected to be submitted in a few weeks, the ministry is expecting that Sebi should defer the proposed implementation of Clause 49. MCA has asked Sebi to make implementation of revised Clause 49 only recommendatory and not mandatory in nature for the time being.
Sebi had issued a master circular on October 29, 2004 which said all the listed companies having paid-up capital of Rs 3 crore or above and having net worth of Rs 25 crore in its history will have to follow these changes from April 1, 2005.