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The recent developments at Ricoh India send a strong signal to India Inc — understand the responsibility of promoters and the might of shareholders.
According to proxy advisory firm Institutional Investor Advisory Services India, Ricoh India parent has “owned up to sleeping at the wheel”.
Well-documented agenda Minority shareholders have requisitioned an extraordinary general meeting on August 5, 2016, asking the audit committee to be sacked, sending a strong signal that Corporate India’s governance failures will increasingly be met with a “muscular response”.
Though this is not the first meeting to be requisitioned by shareholders, it certainly marks a new milestone, IiAS added. “Before this, shareholders in Sanghi Industries called for one in 2012. This was then postponed indefinitely. And last year shareholders of S Kumars Nationwide enacted what can best be described as a circus.
“There may have been a few others, but most of these were without merit,” it said, and added “but this time a substantive, well-documented agenda is being put to vote where the parent itself has been forced to pay the price.”
While Ricoh Japan, having made minority investors unite again, continues to have full faith in the members of the audit committee, the shareholders who have requisitioned the meeting feel strongly that the committee has let them down. And while it will always be difficult to spot pre-meditated, planned fraud, the shareholders have signalled their higher expectations from audit committees, IiAS said.
According to the proxy advisory firm, earlier too, shareholders had grouped together to battle against managements — and today, again they are trying to do the same in Maharashtra Scooters and Bharat Forge. But, regulations have empowered shareholders, and much more importantly, explained to them their rights.
Armed with a supportive regulatory environment, managements who let down their shareholders need to recognise that increasingly it will be these very shareholders who will determine what’s put on the agenda.
Is India Inc listening?
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