A recent report by InGovern Research Services analyzes patterns in the resolutions proposed by Indian listed companies in the just concluded 2013 proxy voting season. The data has been collated and analyzed from a coverage universe of 585 companies forming part of the S&P 500 and BSE 500 indices, which represent over 95% of the market capitalization of Indian listed companies. Management and shareholder resolutions passed in the Annual General Meetings (AGMs) held in 2013 for these companies have been analyzed.The corporate governance structure and practices prevalent in top 100 companies forming part of the Nifty and Junior Nifty indices: Board size, board composition, contribution of directors at board meetings, role of independent directors, constitution of committees, auditor rotation practices, etc. have been analyzed. The report also looks key developments initiated in 2013 to encourage shareholder activism in India. Key highlights of the report:
Resolutions Analysis
- A total of 4,012 resolutions proposed by 585 companies (Companies of the S&P 500 and BSE 500 indices which formed part of our coverage universe)
- Of the 4,012 resolutions proposed in 2013 proxy voting season, there were 3,474 ordinary resolutions and 538 special resolutions. Further, 3,518 resolutions were proposed by management and 494 resolutions were proposed by shareholders
- Most resolutions at AGMs passed through show of hands
Corporate Governance Structure of Top 100 (Nifty and Junior Nifty) Companies
- 10% of companies have board sizes of either more than 16 directors or less than 7 directors
- 13% of companies were non compliant with Clause 49; with less than 50% Independent Directors, with no ID or NED as Chairman
- Average number of Board meetings held is 7
- 17% of Directors attend less than 75% of Board Meetings
- 8% of Independent Directors have outside directorships in more than 10 public companies
- 22% of IDs have served on the Board for more than 9 years
- Audit Committees of only 45 companies comprise only of Independent Directors
- 11 companies have not constituted a remuneration committee
- 36 companies have had the same Auditors for more than ten years
Download he full report, India Proxy Season 2013 Analysis:
Shriram Subramanian, founder and MD of InGovern said,
Corporate India has a long way to go before adhering to corporate governance best practices. The data stands out with even top companies not treating CG practices in the right spirit. Institutional investors and regulators should demand better practices from promoters and company management. The new Companies Act and initiatives from SEBI to improve corporate governance are steps in the right direction.
InGovern is India’s first independent proxy advisory firm. InGovern assists institutional investors that have financial or reputation exposure to public companies. Their services include: (a) Vote Recommendations (b) Bespoke Corporate Governance Research (c) Risk Monitoring (d) Proxy Voting Service. InGovern was founded with the objective of enhancing the corporate governance culture and shareholder activism of institutional investors in India. Their clients are institutional investors – domestic mutual funds, insurance companies, pension funds and foreign institutional investors.
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