As part of the mandatory requirment of the LA, Sebi had earlier said that independent directors might have a tenure not exceeding, in the aggregate, a period of nine years on the board of a company. Sebi has now made this reporting requirement a non-mandatory requirement of the LA.
Earlier, another mandatory requirement for the corporates was to have the whistle blower policy. Sebi circular had said that the whistle blower policy through which company might establish a mechanism for employees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the companys code of conduct or ethics policy. This mechanism could also provide for direct access to the chairman of the audit comittee in exceptional cases. Once established, the existence of the mechanism may be appropriately communicated within organisation. The provision of having whistle blower policy too has been made a non-mandatory requirement. Sebi issued a master circular which supersedes all other earlier circulars issued by it on clause 49 of LA.
Sebi has also set a time frame under which the provisions of the revised clause 49 will be implemented. Sebi said that for entities seeking listing for the first time, the provisions of the revised clause 49 will be implemented at the time of seeking an in-principle approval for such listing.
While for existing listed entities (having paid up share capital of Rs 3 crore and above or net worth of Rs 25 crores or more at any time in the history of the company), the provisions of the revised clause 49 will be applicable by April 1, 2005.