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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Conceptual Framework of Corporate Governance

SEBI constituted a committee in 1999 under Kumar Mangalam Birla, which led to the first formal corporate governance requirements for listed Indian companies. Through which mechanism were these recommendations first given binding effect on listed companies?

The Birla Committee recommendations were first made binding on listed companies by inserting Clause 49 into the stock exchange listing agreement. SEBI used the listing agreement as the enforcement tool, long before the Companies Act, 2013 added statutory governance provisions and later LODR Regulations replaced it.

  1. AInsertion of Clause 49 in the listing agreementCorrect
  2. BEnactment of the Companies Act, 2013
  3. CAmendment to the Indian Contract Act
  4. DNotification of the Secretarial Standards

Explanation

SEBI accepted the Birla Committee recommendations and incorporated them into the listing agreement as Clause 49 around 2000, making them mandatory for listed companies. The Companies Act, 2013 came much later, and the other options are unrelated to the Birla recommendations.

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