Stakeholder Relationship Committee (Committee) is the Committee of the Board of Directors. The main objective of this Committee is to resolve the grievances of security holders of the company.
For listed companies the rights of stakeholders play a very important role in the Corporate Governance of the Company. The listed entity shall constitute a Stakeholders Relationship Committee to look into various aspects of interest of shareholders, debenture holders and other security holders.
Below note gives a gist of the provisions of Companies Act, 2013 (“Act”) and Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 (“Regulations”) and measures that the Company can take to ensure that the stakeholders grievances are resolved and their interests are protected.
Who should constitute Stakeholder Relationship Committee?
Every listed company and the Board of Directors of a company which consists of more than one thousand shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year shall constitute a Stakeholders Relationship Committee
Composition & Meeting
As per the SEBI Listing regulations the Committee should consist of least three directors, with at least one being an independent director, shall be members of the Committee and in case of a listed entity having outstanding SR equity shares, at least two thirds of the Committee shall comprise of independent directors.
The chairperson of the Committee shall be a non-executive director and such other members as may be decided by the Board.
As per the Regulations the Committee shall meet atleast once in a year. The chairperson or, in his absence, any other member of the committee authorized by him in this behalf shall attend the general meetings of the company.
Role of the Stakeholders Relationship Committee shall inter-alia include the following:
(1) Resolving the grievances of the security holders of the listed entity including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc.
(2) Review of measures taken for effective exercise of voting rights by shareholders
(3) Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar & Share Transfer Agent
(4) Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the company.
Measures to be taken by the Committee
a) Since this Committee is a Board Committee, the Board shall delegate powers and responsibilities to the Committee (terms of reference)
b) The terms of reference should include the responsibilities stated under the Act and the Regulations.
c) The Committee can further create sub-committees of the management if the Company has large shareholder base or more than one type of securities listed on stock markets. This will help better management and quick resolution of the shareholder grievances.
d) The Committee shall lay down policies, procedures and ask for report on status of compliances and various measures taken.
e) The Chairman shall attend the General Meetings of the Company to answer the queries of the security holders and in absence of Chairman, any other member of the committee authorized by in this behalf shall attend the General meetings of the Company.
Measures to be taken by the Company
a) The listed entity shall make the specified disclosures and follow its obligations in letter and spirit taking into consideration the interest of all stakeholders.
b) Monitor and review any investor complaints received by the Company and through SCORES platform, ensure its timely and speedy resolution
c) Listed entities to file with recognized Stock Exchanges, on quarterly basis, within 21 days from the end of each quarter, a statement of number of investor complaints pending at the beginning of the quarter, those received during the quarter, disposed during the quarter and those remaining unresolved at the end of the quarter. This statement shall be placed on quarterly basis, before the Board of Directors of the Listed entity.
d) Inform shareholders about all corporate actions clearly and in a timely manner
e) Following details with respect to this Committee to be published in the Annual Report of the Company
- name of non-executive director heading the committee;
- name and designation of compliance officer;
- terms of reference of the Committee (optional);
- number of shareholders’ complaints received so far;
- number not solved to the satisfaction of shareholders;
- number of pending complaints.
- Details of composition and attendance of the members in the Committee meetings and terms of reference of the Committee.
f) Following details to be published on the website of the Company
- Composition of the Committee
- the email address for grievance redressal, contact details of the Registrar and Share Transfer Agents of the Company and other relevant details
- contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances
g) The Company shall maintain a list of complaints/queries/grievances received from the shareholders and ensure that the same are addressed in a timely manner.
h) The Company shall write to all shareholders to register their email id’s for better communication and access.
i) Details pertaining to declaration of dividend, payment of dividend, transfer of dividend and shares to Investor Education and Protection Fund etc. must be informed to the shareholders.
j) Details of voting during the general meetings should be communicated on time along worth necessary details.
The key to good corporate governance is to conduct business in a way that the stakeholder rights and interests are protected, transparency in maintained, Unpublished Price sensitive information is dealt with utmost care and ensure that the trust and confidence of the stakeholder in the Company stays intact. The Stakeholder Committee plays an important role in achieving this objective.
The views mentioned in this article belong to the author alone and do not represent the opinions of the institutions affiliated with the authors. Any error is regretted. For comprehensive understanding of the protocols in place it is advisable to go through the following links.
http://ebook.mca.gov.in/default.aspx
https://taxguru.in/sebi/sebi-notifies-revised-listing-regulations-disclosure-requirements.html
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