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Institutional shareholder dissent decreases in Nifty50 companies
- Majority of dissenting resolutions were tied to board changes and remuneration
Mumbai: Minority shareholder concerns appear to be gaining traction in corporate India. Nifty50 companies witnessed a 30% year-on-year decline in institutional shareholder dissent during the first half of FY24's proxy season, data from market tracker Prime Database revealed.
Instances where more than 20% of institutional shareholders voted against resolutions fell to 44 from 63 the previous year.
"This is an encouraging sign as it shows that companies have started taking cognizance of minority shareholders' interests and are also engaging with investors to understand their concerns prior to proposing resolutions," said Pranav Haldea, managing director, PRIME Database Group.
Majority of dissenting resolutions were tied to board changes and remuneration. The overall number of proposed resolutions dropped to 12,547 in H1 2023-24 from 13,228 during the same period a year ago.
“Even across all companies listed on the National Stock Exchange (main board), the number of such resolutions where more than 20% of institutional shareholders voted against plateaued at 1,498 (or 17.36% of the resolutions for which voting details of institutional shareholders is available) in the first half of 2023-24 in comparison to 1492 (or 16.88% of total) in the same period in 2022-23 (and 1041 (or 15.67% of total) in 2021-22),” said Haldea.
A notable increase was seen in resolutions entirely voted against by shareholders, rising 13% year-on-year to 85.
Promoter participation remained high with voting at nearly 95% of their holdings. In contrast, non-institutional public shareholders displayed low engagement, casting votes on just 16% of their holdings, the data showed.
Of the 861 resolutions concerning related party transactions proposed in H1 2023-24, over 20% of institutional investors voted against 96, with only 11 being defeated.
From the total resolutions, 8,573 were ordinary and 3,974 special. Of these, 53 special and 32 ordinary resolutions failed. While 12,139 were proposed by management, 408 came from shareholders, with only 3 being unsuccessful.
Resolutions were largely concentrated on board changes, financial results, board remuneration, and other corporate aspects.
Domestic mutual funds (46), on the whole, voted in favor in 92% of instances and against in 8% of cases.
As of end-March 2023, shareholding data for companies listed on the NSE showed promoters holding 55%, institutional investors at 12%, individual investors at 24%, and the remaining 9% by other non-institutional entities.
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Business NewsCompaniesInstitutional shareholder dissent decreases in Nifty50 companies
First Published:31 Oct 2023, 08:25 PM IST
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