The Statutory Mandate
Section 178(5) requires the Stakeholders Relationship Committee to consider and resolve the grievances of security holders. The committee’s scope includes: complaints relating to share transfers; non-receipt of dividends; non-receipt of annual reports; non-receipt of refunds; and other investor grievances. The committee must meet at least once a year, and its minutes must record the complaints received, resolved, and pending.
Composition and Quorum
The committee should have a chairperson and at least two other members, with at least one independent director. For listed entities, LODR prescribes specific composition requirements. A committee that does not meet the composition requirement cannot validly discharge its functions.
The Grievance Register
The company should maintain an investor grievance register recording: the complainant’s name; the nature of the grievance; the date of receipt; the action taken; the date of resolution; and the closure communication. The register should be reconciled with the RTA’s records and the SCORES portal for listed entities. A register that is maintained only for the annual report and not for operational tracking is a compliance formality without governance substance.
Resolution Timelines
The committee should adopt internal timelines for resolution—for example, fifteen days for share-transfer complaints and thirty days for dividend complaints—and track adherence. Complaints that remain unresolved beyond the internal timeline should be escalated to the board with a root-cause analysis. A pattern of unresolved complaints is a governance red flag that may attract regulatory scrutiny.
The Annual Report Disclosure
The board’s report must disclose the number of complaints received, resolved, and pending, and the committee’s composition and meetings. For listed entities, the corporate governance report must include the investor grievance details. A disclosure that shows a high pendency rate without an explanation is a reputational and regulatory risk.
Interaction with the RTA and the Board
The committee should review the RTA’s service standards, the turnaround time for share transfers, and the reconciliation of the demat and physical share registers. The committee’s recommendations should be placed before the board with a time-bound action plan. A committee that meets, notes the register, and adjourns without a remediation plan is not discharging its oversight role.
Call to Action: For SRC charter design, investor grievance process review, or annual report disclosure support, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.