Sebi frowns on 15-minute AGMs

SEBI Circular CIR/CFD/DIL/4/2014

The Securities and Exchange Board of India (Sebi) has criticised companies which wrap up their Annual General Meetings (AGMs) within 15 minutes.  AGMs are once-a-year exercises, allowing shareholders to interact with company officials. “Allocation of 15 minutes for conducting the AGM of a public listed company having more than 100,000 shareholders does not appear adequate enough to facilitate a constructive discussion on matters transacted. Such a practice affects the rights of investors to seek clarifications/hold discussions and prima facie appears prejudicial to the interest of the investors,” said the Sebi circular, issued on Friday.

The circular referred to listed companies belonging to a common group formed out of demergers which were found to have done this. The companies had 80 per cent common shareholding, which left only 15 minutes each for these shareholders to attend the AGMs, it said.

The regulator asked exchanges to put in place a mechanism to identify such issues and to ensure the principles of corporate governance are followed in letter and spirit.

A revised version of clause 49 of the listing agreement, which deals with corporate governance requirements of companies looking to list their shares for trading on the stock exchanges, comes into effect from October 1.