‘AGMs not for chai-samosa,’ Sebi tells investors

Urging investor groups to play an active role in governance matters of listed firms, Sebi on Friday said AGMs are no more ‘chai-samosa’ parties and shareholder activism globally has forced even CEOs to resign at one-fourth of the world’s 500 biggest companies.

Appreciating the role of some shareholder groups in the country, Sebi Chairman U K Sinha said here that the regulator has huge expectations from the investor associations but sadly their role has been going down over a period of time. Giving examples, Sinha said that the number of investor awareness camps, for which Sebi also provides some financial support, has gone down in the last 2-3 years. “We have started consultations with the associations. We have also now started consultations at the regional level to find out why they can not be more active,” he said here at an event organised by the Tamil Nadu Investors Association (TIA). 

Stating that the gap is being filled to some extent by the media and the proxy advisory firms in India, Sinha said the trends are very encouraging in some other parts of the world. “Each and every resolution which is being subjected to vote, somebody somewhere is examining that outside the company board and outside the company AGM. Opinions are expressed by the investors. “If you look at the top Fortune 500 companies globally in the last three years, almost one-fourth of the CEOs have been removed because their nominations were rejected by the shareholders and that rejection was prompted and argued by the proxy advisory firms and other investor groups,” Sinha said.

“That is <g data-gr-id="37">type</g> of change which is taking place because of the activism of shareholders. That level of action is taking place globally. The percentage would be much higher if we take into account the proposals for compensation or bonuses that have been rejected. “In India also, it has started happening in a small way. The shareholders are asking questions here also now. They have started asking questions that why a certain percentage of bonus or dividend is being recommended. What is the justification? What is that great the company has done?

“And people are taking the shareholders meeting <g data-gr-id="31">very very</g> seriously. I am sure all of you are aware that in India, that shareholders meeting used to be called and thought to be a “chai and samosa” (tea and snacks) meeting.