Disclosure of shareholders’ pacts: Jo wada kiya wo bataana padega
Scope of Clause 5A of Schedule III.A.A, r/w Reg 30A
Vinod Kothari, Managing Partner | corplaw@vinodkothari.com
The spate of new disclosure requirements introduced by Reg 30 of the Listing Regulations includes one of the most controversial pieces – disclosure of shareholders’ agreements which may impact or are designed to impact the management or control of a listed entity. This requirement is applicable not only to the pacts entered into after the effective date of the amendment, but also to existing agreements, which, by reg. 30A, need to be bared by the contracting parties to the company, and the company in turn, will need to upload this information to the public. There are views circula that the entire body of such agreement has to be made public.
We cannot miss the fact that a sizeable portion of the capital of listed companies in India is held by families. An OECD document says nearly half of the listed companies’ capital in India is held by promoter families.
Naturally, anything that pierces, peeps in or lifts the veil of family arrangements is as challenging as any attempt to get into anyone’s privacy. Note that privacy concerns are not in any way less important for promoter families, than for yours or mine.
Therefore, evidently, this issue has raked up a lot of controversy. Compliance Officers are even facing the query as to whether a will is also required to be disclosed.
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