Stakeholders Relationship Committee: Evolving Role, Composition Standards, and Expanding Governance Mandate

Introduction: From Investor Grievances to Broader Stakeholder Oversight

The Stakeholders Relationship Committee (SRC) has historically functioned as a mechanism primarily designed to address investor complaints. However, its role is undergoing a significant transformation — one that extends well beyond the traditional boundaries of shareholder grievance redressal. Modern corporate governance frameworks now demand that the SRC consider the interests of a much wider group of stakeholders, including employees, customers, vendors, creditors, and the broader community.

This shift in perspective is being carefully tracked and analysed through industry-level governance surveys. The 6th Annual Corporate Governance Survey conducted by Excellence Enablers, focusing on India's top 100 listed companies, provides valuable insights into how SRCs are being constituted, how often they meet, and how far they have evolved in terms of their functional mandate. The findings present a mixed picture — one of encouraging progress in certain areas, alongside notable compliance gaps and missed opportunities in others.

Regulatory Framework Governing the SRC

The SRC operates within the framework established under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (commonly referred to as LODR Regulations). These regulations prescribe the minimum requirements regarding the committee's constitution and responsibilities.

Under the applicable provisions:

  • The committee must have a minimum of three members
  • It must be chaired by a Non-Executive Director
  • Its primary mandate includes overseeing the resolution of grievances of security holders such as shareholders, debenture holders, and other deposit holders

While these are the baseline requirements, the regulations do not prescribe a majority of Independent Directors (IDs) on the committee. However, leading companies are voluntarily going beyond the minimum threshold to strengthen the independence and effectiveness of this committee.

Committee Composition: Compliance Gaps and Best Practices

Minimum Membership Compliance

One of the more concerning findings from the survey relates to basic regulatory compliance. In FY 2024-25, at least one company among India's top 100 failed to maintain even the bare minimum of three members on its SRC. This is a direct violation of the prescribed norms under the LODR Regulations and reflects a lapse in governance oversight that should be immediately rectified.

On the opposite end of the spectrum, one company demonstrated a more expansive approach by constituting a seven-member SRC, signalling a higher degree of commitment to stakeholder oversight through a broader representative base.

Independent Director Representation

While regulations do not mandate a majority of Independent Directors on the SRC, 39 out of the top 100 companies have proactively ensured that IDs constitute the majority of their SRC membership. This voluntary step reflects an understanding that independence in committee functioning is critical to unbiased decision-making and robust grievance resolution.