Nestle India to include shareholder views on royalty payouts

  • Nestle currently pays 4.5% of its net sales as royalty towards its parent company
  • The resolution of seeking shareholder nod for future payments is included as part of its agenda during the company’s upcoming 60th annual general body meeting to be held on April 25

New Delhi: Local arm of the Swiss consumer goods company, Nestle India, will now seek approval of its shareholders every five years for royalty payments to its parent company after receiving investor and proxy firm feedback on the issue.

Accordingly, it has reviewed its royalty payout to make it more inclusive. “We received feedback from our shareholders and other stakeholders on the resolution pertaining to royalty payment and as a responsible corporate citizen with high standards of corporate governance modified the resolution," a Nestle India spokesperson said in a statement.

The company added that while its General Licensing Agreements (GLA’s) are reviewed periodically by the audit committee, “the resolution has been modified to provide for shareholder approval every five years in accordance with applicable laws and regulations."

The resolution of seeking shareholder nod for future payments is included as part of its agenda during the company’s upcoming 60th annual general body meeting to be held on April 25, the company said in a filing to the stock exchange on April 14. The company has sought to modify the agenda item number 6 of the notice of the AGM that pertains to royalty payouts.

"Respecting the feedback received and the commitment of the Company to high standards of corporate governance including shareholder rights, approval of members shall be sought every 5 (five) years in compliance with the applicable laws and regulations," the company said in the filing.

Nestle currently pays 4.5% of its net sales as royalty towards its parent company. To be sure, the resolution does not propose any revision in the royalty rate as of now.

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