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Companies are required to comply with the requirement of the clause on or before March 31, 2004. The corporation is required to obtain a certificate of compliance with corporate governance, as set out in this clause, and to attach that certificate to the director`s report which is sent annually to the shareholders of the enterprise. The same certificate must be sent to the stock markets at the same time as the annual report. Auditors or practising company secretaries issue the certificate. [2] Available under www.sebi.gov.in/cms/sebi_data/attachdocs/1410777212906.pdf, last accessed on 31.07.2016. 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 identical for all Indian stock exchanges, including NSE and ESB). This clause is a further addition to the listing agreement and was only inserted in 2000, following the recommendations of the Kumarmangalam Birla Committee on Corporate Governance, established in 1999 by the Securities Exchange Board of India (SEBI). An independent director is responsible for the actions of a company that take place with his knowledge or when an independent director does not carefully meet the requirements of the listing agreement. Corporate governance as a concept aims to balance the interests of different stakeholders. It can be referred to as the rules or system by which the business is managed or controlled. Taking into account the interests of all stakeholders – management, shareholders, consumers, etc.

– it formulates ways to achieve the company`s objectives. The concept of corporate governance became a central theme following the introduction of the Sarbanes-Oxley Act in the United States. This law was passed to restore public confidence in business. Clause 49 of the Listing Agreement by Securities Exchange Board of India explains the issue of corporate governance and imposes the standards by which companies must work. . . .