Institutional investors can protect interests of minority shareholders by playing an active role in company decisions, says UK Sinha
New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has said institutional shareholders should have a larger say in the functioning of Indian companies to help make the voice of investors heard at the right forum, reports PTI.
"We would be very happy, if we had a large presence of institutional shareholders in the Indian corporates," UK Sinha, Chairman, SEBI told reporters.
Speaking on the sidelines of a lecture on 'Making Companies' Boards More Effective and Accountable", organised by International Management Institute (IMI), Sinha said there is a belief that the matter is not giving the regulator the comfort that is required.
"Voice of retail investors is not getting addressed," he said.
Sinha said almost 50% of shareholding in India in top companies is with promoter group, which is very high, when compared globally.
FII and domestic institutional investors put together are less than 25% equity in the companies, but they have less than 2-3% representation on the boards, he said.
"In a situation like this, majority shareholders have their way. I am quite surprised pension funds are not allowed to invest in the market. If institutional investors play a role, minority interests are protected because the institutional investors give voice to minority shareholders," he added.
Asked about the reports of SEBI setting up a special 'Sahara cell' to deal with the Sahara case, wherein the Supreme Court has upheld the regulator's order directing the group to refund thousands of crores collected from investors with interest, Sinha said SEBI is fully equipped with any matter related to concern of shareholders and investors.
"This country has enough manpower and resources," he said.
On SEBI's long-pending demand to grant it access to call data records to assist it in stock market manipulation cases, especially the matters of insider trading, Sinha said the regulator has been told that a decision would be taken soon in this regard by the government.
"We asked the government that rule should be modified to make SEBI eligible for that. It is still under consideration by the government. SEBI has been told that a decision will be reached soon," he said. .
Speaking about the independent directors on the company boards, Sinha said the regulator is in favour of strict norms for their selection.
"I am more focussed on quality of independent directors and not on the number of independent directors. Many companies in India have taken advantage of extended family norms because the definition of independent director in the country is not clear.
"We need strict norms for selection of independent directors," he said.
Listing out the areas where SEBI is working with a long- term vision, Sinha said that the companies should disclose the agenda items of their AGMs on their websites and on the stock exchanges.
SEBI chairman also said that PSUs and private companies are treated separately for various regulations and the regulator wants "similarly placed companies to be treated similarly."
"SEBI will also work on norms that will review the performance of independent directors," Sinha said.