More than 100 director appointments faced opposition from large public investors
Listed companies such as Ashok Leyland, Ujjivan Small Finance Bank, Adani Wilmar, and Raymond are experiencing increased resistance from large public investors regarding the appointment of directors and their remuneration.
A review by Mint of filings submitted by public companies to the National Stock Exchange (NSE) revealed that between 1 April and 27 July, large public institutions opposed at least 137 resolutions out of 1,300, which accounts for about one in 10 resolutions put forth by 650 companies. Each of these 137 resolutions received at least 33% votes against them, as per research by Mint.
Regulatory Changes and Shareholder Influence
The surge in opposition is attributed to regulatory changes emphasizing governance, the increased shareholding of large institutions in listed companies, and the growing impact of proxy advisory firms like IiAS (Institutional Investor Advisory Services India) and SES (Stakeholder Empowerment Services).
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for instance, Ujjivan Small Finance Bank's move to reappoint independent director Mona Kachhawaha was backed by only 69% of shareholders, falling short of the required 75% majority for a special resolution.
Shareholder Discontent
Investors and proxy advisory firms expressed dissatisfaction with Ujjivan's decision to reappoint Kachhawaha, who had been associated with the group for over a decade. Similar shareholder opposition was seen in the case of Ashok Leyland, where 42% of large investors opposed the reappointment of chairman Dheeraj Hinduja.
Other listed companies facing shareholder unrest include Adani Wilmar Ltd, Raymond Ltd, VIP Industries Ltd, and Wockhardt Ltd.
Rising Influence of Proxy Advisory Firms
Proxy advisory firms like IiAS have been credited with encouraging institutions to take a more active stewardship role in companies. Their recommendations have influenced large money managers and pension funds in their voting decisions.
