SEBI - Allocation of 15 minutes for conducting AGM of a public listed company having more than one lakh shareholders is not adequate enough

Securities and Exchange Board of India (SEBI) has vide its circular dated 1 ^st August, 2014 has directed all stock exchanges to step up and equip their monitoring framework to identify and monitor such practices and to ensure that requirements laid down by Principles of Corporate Governance in the revised Clause 49 of the Listing Agreement are followed in letter and spirit.

According to the circular, SEBI has observed that some listed companies belonging to a common group have held their AGMs, with a time gap of 15 minutes between thetwo AGMs. As stated in the circular, these companies were formed out of demergers and had 80% common shareholding thereby leaving only 15 minutes each for the common shareholders to attend the AGM of these companies.

According to SEBI,  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.  

SEBI has termed as “inadequate” the allocation of 15 minutes for conducting AGM of a public listed company having more than one lakh shareholders to facilitate a constructive discussion on various matters transacted at the AGM.  According to SEBI, such practice affects the rights of investors to seek clarifications/hold discussions and prima-facie appears to be prejudicial to the interest of the investors.

Is to be noted that as per the amended Clause 49 of the Listing Agreement,among other things,

1. the company should seek to protect and facilitate the exercise of shareholders rights.

2. the company should provide adequate and timely information to shareholders,

3. the company should ensure equitable treatment of all shareholders, including minority and foreign shareholders.

Also SEBI clause 5.2 of SEBI Circular dated November 18, 2013 requires stock exchanges to devise a framework in such a way that it detects any non-compliance  with Listing Agreements or applicable laws.

The said clause 5.2 and the Principles of Corporate Governance as provided in clause 49 shall take effect from 1 ^st October, 2014.

Download SEBI Circular >>
Download Revised Clause 49 of Listing Agreement >>