All listed or to-be listed firms will soon have to constitute a competition compliance committee in their companies. The proposal, which will require changes in the Clause 49 of the listing agreement, will be discussed between the ministry of corporate affairs (MCA) and market regulator Sebi.
The MCA will push for the inclusion of mandatory competition compliance committee in every company as part of the Clause 49 of the listing agreement, according to senior officials. The competition compliance committee will have to ensure that business plans of their companies comply with the rules in the Competition Act, 2002.
Separately, the Competition Commission of India (CCI) is also taking up the matter in its forthcoming meeting with the securities and exchange board of India (Sebi). ?In next few days, the officials from both MCA and CCI will be meeting Sebi. This matter will be taken up there,? a senior official said.
While the matter is still being discussed with Sebi, CCI has told top executives of leading listed companies as well as industry bodies such as Ficci, CII and Assocham, that it wants listed companies to set up competition compliance committee in a time-bound manner.
?Since inception, CCI has received around 320 complaints. Last year alone, a large number of complaints were made by companies accusing rivals of indulging in anti-competitive practices. It is evident that there may be a lack of understanding of competition laws within companies. An internal committee will surely help sort issues better,? said a senior official.
Clause 49 of the listing agreement to the Indian stock exchange came into effect from December 31, 2005. The clause has been formulated to improve corporate governance and it necessitates at least 50% of a company’s board to comprise independent directors if it has an executive chairman. As for companies with a non-executive chairman, at least one-third of their board should be independent directors. Clause 49 also talks about mandatory maintenance of internal control by CFOs, filing quarterly compliance report to stock exchange, setting a separate section on corporate governance and composition of an audit committee among others.
