Financial Daily from THE HINDU group of publications
Tuesday, Dec 14, 2004
Industry & Economy
Corporate - Regulatory Bodies & Rulings
FICCI seeks change in time gap between board meetings
New Delhi , Dec. 13
A SECTION of India Inc has sought reversal of the reduction in the maximum time gap between any two board meetings of a company provided in the amended Clause 49 of the Listing Agreements.
As per the amendment, the maximum time gap between any two board meetings has been reduced to three months from four months earlier.
Seeking restoration of the earlier position, in a letter to the Securities & Exchange Board of India (SEBI) Chairman, Mr G.N. Bajpai, FICCI has alternatively suggested that it could be brought in line with the provision of the Companies Act.
The Act provides for a meeting of its board of directors to be held at least once every three months and that at least four such meetings should be held in every year.
In fact, just to comply with the amended Clause 49, the companies would need to hold an extra board meeting, the chamber said.
This would mean that a company has to hold a meeting for approving unaudited quarterly results for the quarter ended December in January.
In order to comply with the amended Clause 49, it will have to hold another board meeting in April.
"As it will not be possible for many companies to finalise their final accounts in the April board Meeting, they will have to hold another in May," the chamber said.
Besides, due to heavy workload, auditors will also not be able to complete audit of all companies during April, FICCI said.
Arguing further, FICCI said that the reduction in time period would also lead to bunching of audit committee and board meetings for a number of companies in the third and fourth weeks of the month following the close of the quarter.
This would make it difficult for Directors who hold these positions in a number of companies to attend and participate in both meetings.
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