Once limited to handling only investor grievances, the Stakeholders Relationship Committee’s (SRC’s) role is now expanding to consider the interests of all stakeholders. As with any committee, for it to be effective, the composition, the number of meetings, and a proper mandate are important.
Excellence Enablers recently published its 6th Annual Corporate Governance Survey, focussing on top 100 companies of India.
The Survey revealed
Composition: In FY 25, sadly one company did not have the bare minimum 3 members, making the committee’s composition non-compliant with law and regulations. On the other hand, there was one company which had 7 members on the committee. While law and regulations do not require a majority of Independent Directors (IDs) on the committee, 39 companies seeing value in independence of functioning of committees, have proactively appointed a majority of IDs on the committee.
Meeting Frequency: In FY 25, 30 companies had only one meeting, while 36 companies had more than 4 meetings. It is time that companies breathe life into the committee, and expand its remit to consider interests of all stakeholders.
Attendance: Happily, 89.95% of members have recorded full attendance, showing their commitment to their role as the committee member.
Grievance Handling: The efficiency of working of a redressal mechanism depends on the resolution of complaints received. It is a good situation when companies continue to have 0 pending complaints at the end of the FY. 1 company which received 6131 complaints, had zero pending complaints at the end of the year.
Scope Expansion: With increasing conversation around stakeholders, the mandate of this committee needs to go beyond what is given in law and regulations. Sadly, 48 companies continue to limit the mandate of their SRCs to mandatory provisions of LODR.
Forward looking SRCs are moving their role beyond handling investor issues. They are looking at:
- Communication with stakeholders
- Broader interests of employees, customers, vendors, and community
- Complaints from SEBI, Stock Exchanges, MCA, or Courts
- Employee Stock Option Plan related matters
- Compliance under PIT Regulations
- Issues related to IEPF, demat/remat, and shareholding structure
- Legal and litigation matters
- Environmental, Social, and Governance (ESG) and Business Responsibility and Sustainability Reporting (BRSR) aspects
- Safety, Health and Environment (SHE) initiatives
The best SRCs are those that move beyond security holders, to all stakeholders.
Explore corporate governance practices being followed by NIFTY 100 companies in our 6th Edition of Corporate Governance Survey.