Under Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, listed entities are required to constitute a Stakeholders’ Relationship Committee (SRC) to review and resolve grievances of holders of securities. The Companies Act, 2013 too has a similar provision for certain classes of companies. On paper, the role is straightforward.
In practice, in many listed companies, including in many Public Sector Undertakings (PSUs), the SRC can sometimes turn into a compliance ritual — meeting only once a year, reviewing a single slide that lists shareholder complaints received, resolved, pending and closing the agenda with little to no discussion. Yes, the requirement is met. The minutes are recorded. Governance, however, may not have truly happened.
While it is true that the “S” in SRC stands for “Stakeholders” across all listed entities, however, in a PSU the word takes on a deeper and more layered meaning, as a PSU is shaped by Government ownership, is under public scrutiny, and the Directors have the responsibility that comes with managing taxpayer-backed institutions.
The difficulty is that grievances of stakeholders (and not only shareholders) in PSUs rarely exist in isolation. An issue in vendor payment may arise from multi-layered approval systems. Repeated pension queries from retirees may signal documentation challenges. Poor service complaints from citizens may reflect operational pressure building somewhere in the organisation. When these issues appear repeatedly, they are not just cases to be resolved — they are actually patterns, worth examining.
Central / State Government ownership adds another dimension. When the enterprise is majorly funded by taxpayer resources, stakeholder concerns carry implications that should go beyond routine complaints. A delayed vendor payment can affect small businesses. A service lapse can quickly attract public attention and cause chaos. In such an environment, the SRC should function as more than a grievance log. There is a need to consciously expand the mandate of the SRC to include all the stakeholders.
Its effectiveness also depends heavily on who sits on it. It is often noticed that, committee composition is treated as a numbers exercise — meeting requirements rather than finding directors who bring operational understanding, stakeholder sensitivity, and the willingness to ask uncomfortable questions. The difference between a formal SRC and a meaningful one often lies in that choice.
If the Audit Committee safeguards financial discipline, the SRC in a PSU should safeguard something equally vital: stakeholder confidence. That responsibility cannot be fulfilled only through an annual formality. It requires correct composition, meaningful agendas, curiosity, pattern recognition, and a genuine willingness to understand what stakeholder grievances are really saying about the institution.
Because in the PSU domain, credibility is built not through formal ticking of the box, but by taking issues seriously and acting on them.
The 5th Annual Corporate Governance Survey, covering the Maharatna and the Navratna companies, brought out by Excellence Enablers Private Limited, indicated that SRCs in 83% of the companies looked at only complaints from shareholders, and nothing more.
Explore corporate governance practices being followed by Maharatna and Navratna companies in our 5th Edition of Corporate Governance Survey.
-Mahima Chopra