Prisma Ltd. is a listed company on NSE. The Board of directors is planning to float a subsidiary company. The management requests you to prepare a detailed representation regarding corporate governance requirements with

To, The Board of Directors, Prisma Ltd. Sub: Detailed representation regarding corporate governance requirements with respect to subsidiaries of a listed entity. Dear Sir/Madam, This representation outlines the corporate governance requirements with respect to subsidiaries of a listed entity, as per Regulation 24 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These provisions aim to ensure good governance practices extend to the subsidiary level and protect the interests of the listed entity's shareholders. The key requirements are as follows: Independent Director on Material Subsidiary Board: At least one independent director of the listed entity shall be a director on the board of directors of an unlisted material subsidiary, whether incorporated in India or not. Audit Committee Review: The audit committee of the listed entity shall also review the financial statements, in particular, the investments made by the unlisted subsidiary. Minutes of Subsidiary Board Meetings: The minutes of the meetings of the board of directors of the unlisted subsidiary shall be placed at the meeting of the board of directors of the listed entity. Reporting of Significant Transactions: The management of the unlisted subsidiary shall periodically bring to the notice of the board of directors of the listed entity, a statement of all significant transactions and arrangements entered into by the unlisted subsidiary. Disposal of Shares in Material Subsidiary: A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than or equal to fifty percent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting. Exceptions apply where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal or under a resolution plan duly approved under section 31 of the Insolvency and Bankruptcy Code, 2016, and such event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved. Sale/Disposal/Lease of Assets of Material Subsidiary: Selling, disposing and leasing of assets amounting to more than twenty percent of the assets of the material subsidiary on an aggregate basis during a financial year shall require prior approval of shareholders by way of special resolution. Exceptions apply if the sale/disposal/lease is made under a scheme of arrangement duly approved by a Court/Tribunal or under a resolution plan duly approved under section 31 of the Insolvency and Bankruptcy Code, 2016, and such event is disclosed to the recognized stock exchanges within one day of the resolution plan being approved. Listed Subsidiary as Holding Company: Where a listed entity has a listed subsidiary, which is itself a holding company, the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 shall apply to the listed subsidiary in so far as its subsidiaries are concerned. We recommend that the Board of Directors of Prisma Ltd. take note of these requirements and ensure compliance when establishing and operating the new subsidiary. Sincerely, [Your Name/Company Secretary]