previous post,
we discussed the recent introduction of mandatory e-voting for large listed
companies with effect from October 1, 2012. The Harvard Law School Corporate
Governance Forum has a post
that sets out some principles and best practices that companies are encouraged
to adopt while conducting electronic shareholders meetings and voting. Although
that is set in the context of laws applicable in the U.S., some of the general
principles would be useful for Indian companies as well.
Stock Exchange Mechanism
this year, SEBI had issued detailed guidelines on offer for sale by promoters
through the stock exchange mechanism (analysed here).
This is in pursuance of the requirement for listed companies to achieve their
minimum public shareholding by next year. Due to concerns raised in connection
with the offer process, it has now been relaxed, and a new set of guidelines
have been issued via SEBI’s circular
dated July 18, 2012. Some press reports that track SEBI’s decision on this
issue are contained here,
here
and here.
It is quite customary for companies (including listed
ones) to offer special rights to financial investors such as private equity
funds and venture capital investors. These rights include board representation,
special quorum requirements and affirmative voting rights on specific matters
both at the board and shareholder meetings. While such rights have been
historically the subject matter of discussion on their legalities such as their
enforceability under certain provisions of the Companies Act, whether they
amount to “control” under the SEBI Takeover Regulations, and whether the stock
exchanges would permit inclusion of these special rights in the articles of
association, these rights have now been the focus of corporate governance
concerns. In a recent instance involving one company, the merits
of providing these rights to a shareholder holding as low as one share have been
questioned
by other minority shareholders.