SEBI has instructed stock exchanges to tighten their monitoring framework and ensure that corporate governance norms are followed.

In a circular on Friday, SEBI said it had observed that some companies of a common group were flouting governance norms by holding AGMs of their listed companies with a 15-minute gap.

The regulator also observed that these companies were formed out of demergers and had 80 per cent common shareholding, thereby, leaving only 15 minutes each for the common shareholders to attend the AGM of these companies.

SEBI observed that allocation of 15 minutes for conducting AGM of a public listed company having more than one lakh shareholders “does not appear to be adequate enough to facilitate a constructive discussion on various matters transacted at the AGM. Such a practice affects the rights of investors to seek clarifications/ hold discussions and prima facie appears to be prejudicial to the interest of the investors.”

It added the principles of corporate governance states that shareholders should have an opportunity to participate effectively and vote in general shareholder meetings. These principles also require companies to facilitate effective participation and exercise of ownership rights and require that company procedures shall not make it unduly difficult or expensive to cast votes.

PTI adds:

Earlier in April, SEBI had come out with detailed corporate governance norms for listed firms providing for stricter disclosures and protection of investor rights, including equitable treatment for minority and foreign shareholders. Under the norms, listed entities had to get shareholders’ nod for related party transactions, among others.

The market regulator had said the monitoring cell formed by the stock exchanges would monitor the compliance of such corporate governance norms for all listed companies.

In November last, SEBI had asked the stock exchanges to put in place a system to monitor and review the compliance of listing conditions by companies.

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