Institutional shareholders get higher weightage among Indian companies

MUMBAI: Institutional shareholders vote has started getting more weightage among Indian companies to pass board resolutions. The year 2015 saw a drop of 28% in passage of resolutions where over 20% institutional shareholders voted against it.

In 2014, 1032 resolutions where passed by company boards despite a negative vote from institutional shareholders. In 2015, the number of such resolutions dropped to 747, data compiled by Prime Database showed.

Companies where over 20% institutional shareholders cast a negative vote included ACC, Adani Ports, Bajaj Auto and Bharat Heavy Electricials among others.

“There has been far greater public scrutiny of the resolutions, forcing the companies to propose only such resolutions which are more likely to pass,” Pranav Haldea, Managing Director, PRIME Database. “There has been an increase in the participation of institutional investors on account of the facility of e-voting that was made mandatory last year. Also, Sebi’s Listing Obligations & Disclosure Requirements, have also brought about a renewed focus on corporate governance.”

Even in terms of resolutions which were completely voted against by shareholders at AGMs/EGMs/Postal Ballots and Court Convened Meetings held during the year, 2015 saw a huge drop of 44%. While there were 41 such resolutions in 2014, this number dropped to just 23 in the year 2015. Even of these 23 resolutions, however, 7 were re-proposed to be passed, all of which did eventually get passed. A further 4 resolutions of the balance 16 have also been re-proposed and are pending approval.

Of the 12,653 resolutions, 10,999 resolutions were passed in AGMs of 1482 companies in calendar year 2015 translating into an average of 7.40 resolutions per AGM and 7.42 resolutions per company.

Of the 12,653 resolutions, 290 resolutions were passed in EGMs of 127 companies in calendar year 2015 translating into an average of 1.90 resolutions per EGM and 2.28 resolutions per company.

Of the 12,653 resolutions, 1,297 resolutions were passed in Postal Ballots of 459 companies in calendar year 2015 translating into an average of 2.30 resolutions per Postal Ballot or 2.83 resolutions per company.

Of the 12,653 resolutions, 67 resolutions were passed in CCMs of 66 companies in calendar year 2015 translating into an average of 0.97 resolutions per CCM or 1.02 resolutions per company.

Almost all resolutions were voted in favour by Promoters. Out of 9,637 resolutions, where voting details are available, only in 93 cases did the Promoters vote against the resolution (greater than 20 per cent). 4 out these 93 resolutions did not get passed. 31 out of the 93 resolutions belonged to companies belonging to Nifty-200, all of which got passed.

As far as other Public Shareholders are concerned, out of 10,204 resolutions, where voting details are available, they voted against the same (greater than 20 per cent) in 479 cases. However, 477 out of these 479 resolutions still got passed.

38 Domestic Mutual Funds, as a whole, voted in favour in 73 per cent of the cases, against in 4 per cent of the cases and abstained in 23 per cent cases.