Mumbai: Concerned over flouting of listing norms by companies and lack of good governance practices, Sebi asked stock exchanges to step up their vigil to identify any errant behaviour including while holding AGMs.
The regulator said there have been cases when corporate groups with multiple listed companies have wrapped off various AGMs (annual general meetings of shareholders) within time gaps of 15 minutes without giving enough discussion time to shareholders, numbering over a lakh. "Such a practice affects the rights of investors to seek clarifications/hold discussions and prima-facie appears to be prejudicial to the interest of the investors," Sebi said in a strong-worded circular to the stock exchanges.
Sebi asked the stock exchanges to "step up and equip their monitoring framework to identify and monitor such practices" and ensure that the Principles of Corporate Governance are followed in "letter and spirit". There have been instances when multiple listed companies of a single corporate group held almost back to back AGMs on a single day with very short-duration time gaps. The companies explain such practices by saying that their various listed companies mostly have common shareholders, while holding AGMs on single day and at single venue saves time and cost too.
In its circular, Sebi said that "the Principles of Corporate Governance, inter-alia, provide that shareholders should have opportunity to participate effectively and vote in general shareholder meetings. "These principles also require companies to facilitate effective shareholder participation and exercise of ownership rights and require that company procedures shall not make it unduly difficult or expensive to cast votes. In this regard, Sebi observed that "some listed companies belonging to a common group have held their AGMs, with a time gap of 15 minutes between two AGMs". "It is also observed that these companies were formed out of demergers and had 80 per cent common shareholding thereby leaving only 15 minutes each for the common shareholders to attend the AGM of these companies," it added.
While Sebi did not identify the corporate group, late last year it had asked the stock exchanges to seek clarification from listed companies of Indiabulls group after they were found to have held 15-minute-long AGMs of various listed firms after gaps of 15 minutes each between two meetings. "It is observed that allocation of 15 minutes for conducting AGM of a public listed company having more than one lakh shareholders does not appear to be adequate enough to facilitate a constructive discussion on various matters transacted at the AGM," the market regulator said. The circular comes ahead of new corporate governance norms coming into effect for all listed companies from October 1, 2014.
