Glass Lewis has submitted a response to the Securities and Exchange Board of India (SEBI)’s consultation on proposed amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The proposed amendments address four key issues–shareholder agreements, special rights offered to pre-IPO investors, sale and disposal not by way of scheme of arrangement, and board permanency. SEBI has proposed that shareholder agreements must be publicly disclosed, and shareholder approval by way of special resolution and majority of minority should be obtained for such agreements. Special rights offered to pre-IPO investors must also receive periodic shareholder approval every five years. Non-scheme of arrangement sale or disposals must be publicly disclosed and approved by shareholders by way of special resolution and majority of minority. Finally, SEBI has proposed a periodic requirement for all categories of directors serving on the board of listed entities, at least every five years.
We broadly agreed with all the proposed amendments, with certain provisos. Regarding shareholder agreements, we encouraged SEBI to provide clarity to all stakeholders on the disclosure requirements to avoid loopholes. For special rights, we suggested a tighter approval margin by special resolution and majority of minority to ensure minority shareholder voices are heard. Lastly, on board permanency, we believe the timeframe for approval should be reduced to three years, aligning re-election periods with classified boards in most other markets.
You can download our full response here:
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Kevin Gibb and Decky Windarto also contributed to this submission.