Feedback on SEBI report on disclosure pertaining to analyst
meets, investor meets, conference calls
This article is regarding feedback of the the sebi
circular dated 20th November, 2020
Report on
disclosure pertaining to analyst meets, investor meets and conference calls.
Here is the link to that report, (click
here)
The main
objective of these recommendations are to remove information asymmetry created due to preferential treatment
given to large and institutional investors leaving minority shareholders at a
disadvantage.
Now I would explain why this recommendations are
very important and how could they bring a level playing field for minority
shareholders with an example of my experience at the AGM of M&M ltd in
2019.
First here is the summary of the recommendations
made in the report:
Summary of the recommendations
In view of the aforementioned discussion, following are the
recommendations to be included
along with the current regulatory requirements specified under SEBI
(LoDR) Regulations,
2015:
1.
Audio/video recordings shall be made available on the website of the
listed entity and
respective stock exchanges
immediately after the
post-earnings conference
call/quarterly call, before the next trading day or within twenty-four
hours from the
occurrence of event or information, as required under the Reg 30 of SEBI
(LoDR)
Regulations, 2015, whichever is earlier.
2.
Written transcripts of such calls should be made available on the
website of the listed
entity and respective stock exchanges within five working days after the
earning call.
3.
Listed company shall
make available audio/video
recordings and the
written
transcripts on their websites for a period of atleast eight years in
addition to the details
disseminated on respective stock exchanges.
4.
Listed companies can decide as to whether conference calls are open to
everyone to
attend or limit such calls to their existing shareholders.
5.
Listed companies to provide number of one-to-one meetings with select
investors as
part of corporate governance report submitted by them to stock exchanges
on a
quarterly basis along with affirmation that no UPSI was shared by any
official of the
company in such meetings. Company shall maintain a record of all such
one-to-one
meetings, as the same could be required for future reference. The data
should be
preserved for a period of atleast eight years.
Coming back to my experience at M&M AGM.
I attended the AGM in 2019, 7th August
Around 3 p.m. the meet started.
I was young so I was just seated and observing the
proceedings of the AGM, after the formalities such as speech by chairman and the
company secretary and the voting procedure, came the question and answer
session.
Many speakers raised their queries and questions....
One such person was Ronald Fernandez
(I remember his name because of the drama and also I
have seen him many times as he actively attends the AGM)
He came forward to the place for speaker, after his
speech he requested Mr. Anand Mahindra for a meeting with him for just 5-10
minutes.
Anand Mahindra denied,
Ronald Fernandez still tried ask for a meet and
went back to his seat.
End of the
story, I remember this Simple incident
here we can see how the management ignores and puts minority shareholders at
disadvantage.
Management denies meet with small and minority
investors but if we check the announcements on BSE, we could see numerous analyst/investor
meets...
Well this definitely seems unjust for small
shareholders.
So is the
management to be blamed?
From the
point of view of management.
Even if they meet 100 minority shareholders who
have investment worth say 1 lac on average it will amount to only rupees 1
crore....
Whereas if they meet a fund manager with AUM of
10,000 crores and if they decide to invest even 1% of the fund into the company
it amounts to 100 crore...
So from the point of view of management they may
not be wrong in discriminating minority v/s large shareholders.
But for
minority shareholders the problem still persists: this is where these new recommendations could
help bring a level playing field for minority shareholder.
I have suggested 2 things.
In point 4 the conference calls should be made open to
everyone but on listen only mode. It’s up to the management whether they want
to allow everyone or give priority to just shareholders for interactions and
asking questions.
In point 5 I have suggested that the one on one
investor/analyst meets should be audio and video recorded (failure to do so
should lead to case of insider trading and both management and investor should
be penalised)
Such compliance will ensure transparency and
accountability, also force companies to avoid one on one meets
(Which put minority shareholders at disadvantage)
Which will lead to more questions and interactions
on conference calls which will benefit all stakeholder.
I have sent
my above mentioned views on comments to them.
The report
is open for public comments till 21st December.
You could
also send in your comments at this mail id: consultationcmd2@sebi.gov.in
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