State the principles governing Corporate Governance in protecting the interest of Minority Shareholders.

CS Professional · Corporate Funding & Listings in Stock Exchanges · PYQS · December 2020
State the principles governing Corporate Governance in protecting the interest of Minority Shareholders.

Answer & Explanation:

A listed entity having listed its specified securities shall comply with the corporate governance principles as specified in Chapter IV, which shall be implemented in a manner so as to achieve the objectives of the principles as included under Chapter II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and mentioned below: a) The rights of shareholders The listed entity shall seek to protect and facilitate the exercise of the following rights of shareholders: i) Right to participate in and to be sufficiently informed of, decisions concerning fundamental corporate changes. ii) Opportunity to participate effectively and vote in general shareholder meetings. iii) Being informed of the rules, including voting procedures that govern the general shareholder meetings. iv) Opportunity to ask questions to the board of directors to place items on the agenda of general meetings, and to propose resolutions, subject to reasonable limitations. v) Effective shareholder participation in key corporate governance decisions, such as the nomination and election of members of board of directors. vi) Exercise of ownership rights by all shareholders, including institutional investors. vii) Adequate mechanism rights by all shareholders, including institutional investors. viii) Protection of minority shareholders from abusive action by, or in the interest of, controlling shareholders acting either directly or indirectly, and effective means of redress. b) Timely information The listed entity shall provide adequate and timely information to shareholders, including but not limited to the following: i) Sufficient and timely information concerning the date, location and agenda of general meetings. ii) Capital structure and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership. iii) Rights attached to all series and classes of shares, which shall be disclosed to investors before they acquire shares. c) Equitable treatment The listed entity shall ensure equitable treatment of all shareholders, including minority and foreign shareholders, in this manner: i) All shareholders of the same series of a class shall be treated equally. ii) Effective shareholder participation in key corporate governance decisions, such as the nomination and election of members of board of directors, shall be facilitated. iii) Exercise of voting rights by foreign shareholders shall be facilitated.

Topics: Corporate Governance

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