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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Concept of Governance in Professional Managed Company and Promoters Driven Company

Nair Pharma Ltd is a promoter-driven listed company. Minority shareholders complain that the promoter-appointed board ignores their concerns. Which mechanism most directly gives minority shareholders a voice in such a company?

Independent directors, along with a stakeholders relationship committee, give minority shareholders a direct voice in a promoter-driven company. They balance promoter influence and handle investor grievances, whereas adding promoter directors, restricting information or dropping the AGM would reduce minority protection.

  1. AAppointment of independent directors, including through approval by majority of minority shareholders where required, and a stakeholders relationship committeeCorrect
  2. BIncreasing promoter directors on the board
  3. CRemoving the annual general meeting
  4. DLimiting information given to shareholders

Explanation

Independent directors and the stakeholders relationship committee provide a channel for investor grievances and balance promoter influence. Adding promoter directors or reducing information weakens minorities. Removing the AGM is not permitted and would reduce participation.

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