ADDRESSING SHAREHOLDERS’ CONCERNS: INTERNATIONAL ACTIONS

Stakeholders Relationship Committee, a mechanism provided in statutes, has been underutilised by companies for dispute resolution

of the company.”

The SRC, a creation of the Companies Act, 2013, replaced the earlier shareholders grievances committee. It is also one of the mandatory board committees prescribed by the Sebi Listing and Disclosure Requirements Regulations, 2015. According to the data provided by Prime Database, as many as 68 listed companies have not constituted an SRC. But a large majority of companies have done so and over a half of the members of these committees were independent directors. SRCs of some 1,247 companies were headed by independent directors, while 265 had non-independent nonexecutive directors headed them. So, what do SRCs do?

In the days of physical share certificates and transfers done through the postal system, complaints related to share transfers would be numerous. “Everything is electronic today. What used to be the predominant shareholder complaint 1015 years ago has gone down Internationally, it seems that a SRC is not mandated in most countries. Discretion is vested with companies to devise a mechanism for investor relations wide and may travel much beyond shareholders

Senior independent director can also assist the board in providing a separate channel of communication

The disclosure policy of the company should address external communications such as analyst briefings

A listed entity has to design and implement an investor relations programme

United Kingdom

Companies have been vested with the power to devise channels of addressing shareholders’ concerns and the mechanism in this regard The responsibility for this has been cast on the senior independent director who should be available for shareholders’ concerns, if the normal channels fail

United States

Discretion is vested with companies to devise a mechanism for stakeholders’ relations

Companies/ board may delegate the stakeholders’ relation charter to one of its Committees

Larger role for lead independent director and the legal department

Australia

Investors’ relationship mechanism is

Haribhakti suggests that whistle-blower complaints could be processed initially by this committee before being taken up by the audit committee.

However, there is also a need to ensure that the roles of different committees do not overlap and that SRCs follow an issue-based approach and avoid overreach. As the importance of the matters

Singapore

The board is tasked with the responsibility of establishing and maintaining a regular dialogue with shareholders and address shareholders’ concerns

The board should state in the company's annual report the steps it has taken to solicit and understand the views of the shareholders

Lead independent director should be available to shareholders where they have concerns

As many as 68 listed companies have not constituted Stakeholders Relationship Committee

being handled rises, the composition of the committee will also receive more attention, feel many directors. “I would recommend a blend of independent and executive directors,” says Haribhakti.

Perhaps a more proactive SRC could help boards identify issues and address them before they turn into a sensational newspaper headline.