Virtual meetings give rise to new concerns, says SEBI chief

SEBI chairman Ajay Tyagi has said that the new technology trends that have come into the stock markets post the Covid-19 pandemic are here to stay. Tyagi was talking at the National Institute of Securities Market (NISM) virtual conference today. He further highlighted the problems of virtual meetings and said they need to be addressed.

“Virtual meetings have given rise to new concerns which were earlier not there in physical meetings. For instance, whether investor voices are adequately heard during virtual shareholder meetings, whether shareholders have sufficient opportunity to pose questions to the management, whether confidentiality & security concerns are adequately addressed in virtual Board meetings, etc. These issues need greater study if such virtual meetings are to become a regular feature in the future,” Tyagi said.

With the Ministry of Corporate Affairs permitting AGMs through VC/ other audiovisual means, virtual AGMs became the norm since last year. Companies accustomed to holding large physical AGMs had to change their settings and the way they interacted with their investors. On the other hand, investors accustomed to attending physical meetings had to learn how to be tech-savvy, attend and ask questions during virtual AGMs. Apart from virtual shareholder meetings, virtual Board meetings also became the norm since last year.

Tyagi said that corporate functioning and technology played the most important role in facilitating the relatively smooth operation of their activities. The lockdown and social distancing requirement led to most corporations permitting their employees to work from home. Physical meetings got replaced by video conferences. The conferences became e-conferences and webinars just like this one. HR policies, including employee compensation policies, were restructured to suit the new way of working. It is more than likely that many of these trends which were induced by the pandemic might stay even after the pandemic dissipates, he said.

He further said that intermediaries and companies- everyone saw increased technology adoption in their activities post start of the pandemic. Intermediaries started offering more online services and replaced physical interactions with customers with virtual interactions. SEBI facilitated e-KYC for customers, which enabled easier on boarding access for new investors by intermediaries.

“I have already mentioned the increasing trend of virtual meetings, including eAGMs & e-Board meetings by companies. On the other side, more and more investors also moved from physical dealings to online dealings with the pandemic making physical interactions difficult. While a lot of these trends were thrust upon people due to the pandemic, many are likely to stay,” Tyagi said.

On diversification through investment abroad

Another trend witnessed in this financial year is diversification through investment abroad. The net inflows in dedicated overseas schemes of Mutual Funds in this financial year till January are nine times that of the last financial year’s corresponding period and three times if we consider the entire last financial year. ii. The interest appears to be only increasing over time, with around INR 5000 crore of net inflows in such schemes in just the last two months- December and January. This appears to indicate an increased appetite for diversification by investors through investment abroad or a general increased interest in more global exposure

On ESG issues

Initially, at the beginning of the pandemic, there was a concern that climate change and environmental issues may be relegated to the background as the fundraising in itself was perceived as a challenge in these difficult times. However, we can see that focus on ESG issues globally, and India has only increased this financial year.

In line with the general global trend of ESG becoming more and more prominent for investors, Indian investors also showed increased interest in ESG investment.

This can be seen clearly in the increasing number of ESG schemes by Mutual Funds and investment in such schemes. From 3 ESG schemes of Mutual Funds as at the end of FY 2019-20, today we have 9 ESG schemes, i.e. 6 schemes have been added only in the last ten months. From around INR 2,100 crore invested in such schemes in the last financial year, the amount has increased to around INR 3,800 crore in FY 2020-21 till January 31, 2021. While the trend appears to be on the rise, we still have a long way to go compared to global levels.

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