SEBI has issued a circular dated 23rd October 2008 and amended 49 of the Listing Agreement to provide a clarification regarding independent directors. The clarification is to the original circular which, inter alia, provided for change in the proportion of independent directors depending on whether or not the Chairman is a Promoter or related to the Promoters, etc.
This amendment provides an explanation to define the words “related to any Promoter”. Essentially, it seeks to list the persons who are deemed to be so related.
This Explanation, while clarifying some issues, creates, at first impression, some fresh doubts and questions, which I am listing here for now and will provide some inputs in a day or two.
– The circular says that “amendments”, for already listed companies, have to be given effect to by 31st March 2009. Does this mean that this extension is given for all amendments in the original circular?
– Does it mean that “relatives” are not deemed to be related since the definition seems to be exhaustive?
and so on.
Jayant Thakur
Compliance Proof Your Company – The IT Way to Tackle Clause 49
Inspired by the need to better protect investors and in response to the growing number of corporate and accounting scandals in the recent past, companies are increasingly realizing the importance to strictly comply with legislations as laid down by acts such as Clause 49 of the 1992 SEBI ACT.
These mandatory corporate governance laws require complete documentation and evaluation of financial statements to be personally certified by CEOs and CFOs. The law also calls for company top management to accept responsibility and be accountable for establishing and maintaining internal controls for financial reporting. These controls are subject to internal evaluation and ultimate disclosure of any deficiencies to Audit Committees.
Role of Information Systems in ensuring compliance
Compliance with SEBI Clause 49 and Sarbanes-Oxley is extremely process-intensive. It also requires seamless storage and retrieval of documents across locations and departments. As compliance is a recurring activity, manually ensuring compliance in mid-size to large companies is very challenging and almost impossible. Ensuring compliance effectively requires information systems that are based on robust workflows, that simultaneously provide for centralized repositories for document storage and that build in access and permissions based on organization hierarchy.
Why automate compliance process and policies?
Creating a system for a requirement as critical as compliance with corporate governance acts is not possible with paper-based processes.
Automation of compliance process and policies has to consider key factors listed below to ensure maximum efficiency of the system
• Integrated MIS through graphs and statistical reporting to enable managers to view compliance status and results before certification and to identify deficiencies.
• Use Business Rules to meet objectives of risk assessment and controls effectiveness.
• Collaboration of documents for easy and controlled access and real time activity on remedial procedures
A Step Forward to making your organization compliance proof:
As compliance with regulatory bodies become increasing concerns for organizations today, using a scalable Business Process Management platform such as Skelta Compliance Accelerator allows for internal controls to be architecturally built in; hence increasing real time activity. Skelta’s Business Rules approach, allows organizations to control risks, manage liabilities and ensure transparency of their processes through clear audit trails and comfortably comply with the Clause 49 mandate.