The Stakeholders Relationship Committee (SRC) is a key governance body. It deals with investor concerns and ensures that stakeholder issues are addressed in a timely manner. The committee becomes important when companies have a large base of security holders and when investor communication needs close oversight.
The legal framework for SRC is primarily set out under the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. Both provide guidance on when the committee is required and how it should function.
Applicability of the Stakeholders Relationship Committee
Section 178 of the Companies Act, 2013 prescribes the requirement based on the number of stakeholders. A company must constitute an SRC if it has more than 1,000 security holders. This includes shareholders, debenture holders, deposit holders and other security holders
The trigger here is not financial size. It depends only on the number of stakeholders. So, even a company with moderate operations may need to form this committee if the stakeholder base is large enough. Companies with 1,000 or fewer stakeholders are not required to constitute the committee under the Act.
The position changes for listed entities. SEBI (LODR) Regulations, 2015 make it mandatory for all listed companies to constitute a Stakeholders Relationship Committee. This applies regardless of the number of stakeholders. So, even if the investor base is small, the requirement still applies. This ensures that listed entities maintain a formal system for addressing investor concerns.
Composition of the Committee
The composition of the SRC differs slightly under the Companies Act and SEBI LODR but both aim to ensure independence and accountability. Under the Companies Act, the Board is responsible for constituting the committee if the company has more than 1,000 shareholders, debenture holders, deposit holders or other security holders and the chairperson shall be a non-executive director
SEBI LODR prescribes a more structured composition. The committee must have:
- At least three directors
- At least one of them must be an Independent Director
- The Chairperson must be a Non-Executive Director
- The Chairperson of the SRC is required to be present at the Annual General Meeting
This ensures that stakeholder queries can be addressed directly at the meeting. These requirements strengthen oversight. And they ensure that investor issues are handled at an appropriate level within the company.
Meetings of the Committee
The Companies Act does not prescribe a fixed number of meetings for the SRC. There is flexibility in how often the committee meets. SEBI LODR follows a similar approach. Meetings are to be held as and when required. The frequency depends on the volume and nature of stakeholder grievances. This means the committee is expected to be responsive. If there are more complaints or issues, meetings should be more frequent. If issues are minimal, meetings can be less frequent. The focus here is on responsiveness rather than fixed frequency.
Quorum of the Committee
SEBI LODR does not provide a specific quorum requirement for the SRC. In practice, companies follow their internal governance framework. Board-approved policies or secretarial standards are generally used to determine quorum.
Roles and Responsibilities under the Companies Act
The core function of the SRC is grievance redressal. The committee addresses concerns of shareholders and other security holders.
Key responsibilities include resolving issues related to the transfer and transmission of shares, addressing non-receipt of dividends or annual reports, handling requests for duplicate share certificates and monitoring the mechanism for redressal of investor complaints
The committee also reviews measures to ensure effective exercise of voting rights. It ensures that communication with stakeholders is timely and clear. Another important role is oversight of the Registrar and Share Transfer Agent (RTA). The committee monitors their performance and ensures service standards are maintained. Reducing pending investor complaints remains a continuous responsibility.
Roles and Responsibilities under SEBI LODR
SEBI LODR expands the scope of the SRC. It emphasises investor protection and service delivery.
- Grievance Redressal of Security Holders: The committee is responsible for resolving grievances of all security holders. This includes transfer and transmission of shares, Non-receipt of annual reports, Non-receipt of declared dividends, Issue of new or duplicate share certificates, and issues related to general meetings
- Facilitating Shareholder Rights: It also reviews measures taken to facilitate shareholder rights. Voting processes must be transparent and accessible.
- Oversight of Registrar & Transfer Agent (RTA): Oversight of intermediaries is another key area. The committee reviews adherence to service standards by the Registrar to an Issue and the Share Transfer Agent. This ensures that investor services are efficient.
- Monitoring Investor Communication & Unclaimed Amounts: The committee also monitors communication and unclaimed amounts. It reviews steps taken to reduce unclaimed dividends and ensure the timely delivery of documents such as dividend warrants, annual reports and statutory notices.
- Monitoring Investor Communication & Unclaimed Amounts: Debenture holders are also covered. The SRC addresses issues relating to payment obligations, security cover and compliance with debenture terms.
In simple terms, the committee acts as a bridge between the company and its investors. It ensures that complaints are resolved quickly and that investor rights are protected.
Role of the Company Secretary
The Company Secretary plays a central role in the functioning of the SRC. The role is both administrative and compliance-focused. The Company Secretary acts as the nodal point for investor grievances. They coordinate with the Registrar and Transfer Agent to ensure timely resolution. They are responsible for preparing and circulating the agenda and notes for meetings. They also maintain records and minutes of the committee. Compliance is another key responsibility. The Company Secretary ensures that the company meets requirements under the Companies Act and SEBI LODR. They also facilitate reporting of investor complaints to stock exchanges. This role ensures that the committee functions smoothly and that stakeholder concerns are addressed without delay.
The Stakeholders Relationship Committee plays a critical role in investor protection. It ensures that grievances are addressed and that communication remains effective. The Companies Act sets the basic framework but SEBI LODR strengthens it, especially for listed entities. And the Company Secretary ensures coordination, compliance and proper functioning of the committee. In effect, the SRC supports trust and it helps companies maintain a transparent and responsive relationship with their stakeholders.