Vocal investors express opinion before casting vote in company meets

MUMBAI: Equity shareholders have increased their proactive engagement with Indian companies empowered by the changing regulations.

"A new class of investors is vocalizing its opinion and casting its vote,rather than exiting their shareholding at the first whiff of a disagreement with management decisions.In just the last 18 months,37 resolutions have been defeated by shareholders," Proxy advisory firm IiAS said in a recent report.

Some of the recent instances such as United Spirits,where related party resolutions were defeated,Siemens,where shareholders forced the parent to step-up payment for the acquisition,Crompton Greaves,the deal structure was changed and PTL Enterprises, where shareholders got the court to intervene,show how stakeholders have engaged with company managements to address their concerns and assert their rights.

"Maruti Suzuki, Akzo Nobel, Siemens, are all cases where investors have been in dialogue with the company to sort through issues. While for the most their voice has been passive but firm, in the case of PTLE, the state government as shareholder chose to raise its Voice by opting for legal recourse," IiAS said.

It said these instances can no longer be seen as one-off,but a change in how shareholders are starting to engage with companies.These developments are supported by regulation.The Companies Act,2013,focuses on governance and a board structure that fosters good behavior and also requires obtaining approval by majority of minority shareholders for related party transactions.In line with the new act,market regulator Sebi too has tightened corporate governance framework.

Incidentally, on the strength of these regulations,India ranks 8th on protection of minority investors.