Corporate governance compliance under the Companies Act 2013 and SEBI LODR Regulations 2015 requires continuous monitoring of board composition, committee constitutions, disclosure obligations and conflict management.
Corporate governance in India is regulated by the Companies Act 2013 (for all companies) and additionally by the SEBI LODR Regulations 2015 (for listed entities). The framework prescribes minimum board composition, independent-director requirements, mandatory committees (audit, nomination and remuneration, stakeholders’ relationship, risk management for applicable companies), related-party-transaction approvals, vigil mechanisms and the code of conduct for independent directors under Schedule IV.
Non-compliance attracts penalties from the ROC, enforcement action from SEBI (for listed entities), personal liability of directors and officers in default, and reputational damage. AMLEGALS advises companies on building governance frameworks that meet statutory requirements while remaining commercially practical — board advisory, committee structuring, RPT protocols, policy drafting and annual governance audits.
Advising on minimum board size, independent-director requirements, woman-director compliance and nominee-director appointments.
Constituting and advising audit committees, NRC, stakeholders’ relationship committees and risk management committees with compliant compositions and terms of reference.
Establishing RPT identification, approval and disclosure frameworks compliant with Section 188 and Regulation 23 LODR.
Advising on appointment, tenure, remuneration, Schedule IV compliance and liability protection for independent directors.
Drafting mandatory governance policies including RPT policy, vigil mechanism, dividend distribution policy and board diversity policy.
Conducting annual governance compliance audits against the Companies Act and SEBI LODR requirements.
Section 177 mandates an Audit Committee for all listed companies and prescribed classes of public companies. Section 178 mandates a Nomination and Remuneration Committee and a Stakeholders’ Relationship Committee. For listed entities, the SEBI LODR additionally requires a Risk Management Committee. Each committee must have a prescribed minimum composition of independent and non-executive directors.
Independent directors are liable only for acts of commission or omission that occur with their knowledge, attributable through board processes, and with their consent or connivance or where they have not acted diligently (Section 149(12)). However, the Supreme Court and tribunals have held that attendance at board meetings where the impugned decision was taken may create liability. The Schedule IV code prescribes the duties and professional conduct expected.
Under Section 188, all RPTs on the prescribed list require prior board approval. For transactions exceeding prescribed thresholds, shareholder approval by ordinary resolution is required (special resolution for listed entities under LODR). The audit committee must pre-approve all RPTs under Section 177(4)(iv). Omnibus approvals can be granted for recurring transactions within specified parameters. Non-compliance attracts penalties and the transaction is voidable at the option of the board.
Listed entities must file quarterly corporate-governance reports, quarterly shareholding patterns, annual secretarial audit reports (Section 204), annual returns on AGM and board meetings, and event-based disclosures under Regulation 30 of LODR. The stock exchanges monitor compliance automatically and impose fines for delays. Persistent non-compliance can lead to suspension of trading.
Yes. Officers in default can face criminal prosecution for governance failures including failure to constitute committees, failure to maintain books of account, false statements in filings and fraud. Section 447 (fraud) carries imprisonment up to ten years and fine up to the amount involved. Directors who sign false financial statements are personally liable under Section 134.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
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