Key Points
Mumbai: In a marked departure from their earlier approach to the endorsement of promoter decision-making, governance-focused mutual fund managers are adopting a more assertive stance by actively opposing company resolutions they perceive as detrimental to public shareholders.. Data from primeinfobase.com showed the percentage of votes opposing resolutions soared to a record high of 8.55% in FY24, a notable leap from 7% in FY23 and 4.62% in FY22..
This substantial increase aligns their position more closely with the practices observed in developed markets, where institutional investors typically oppose 8-10% of resolutions proposed by companies...
"Mutual funds are now placing strong emphasis on governance in the companies they invest in..
The resolutions most frequently opposed by fund managers pertain to board appointments, extravagant compensation packages for company officials, and misallocation of company funds..
Market regulator Sebi introduced the Stewardship Code for all mutual funds and all categories of alternative investment funds (AIFs) on July 1, 2020, and asked institutional investors like banks, insurance companies, and pension funds to follow the 'transparent' Stewardship Code to be accountable to their clients and beneficiaries..
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