Insurance Regulatory and Development Authority (IRDA) first asked insurance companies to adopt a stewardship policy in 2017. Pension funds, followed, rolling out these codes in 2018. Although mutual funds did most of what was expected for meeting their responsibilities under the stewardship code, SEBI asked them, and Alternate Investment Funds, to formally adopt a code only in 2019.
There has been significant progress on investor stewardship since. All the large investors now have stewardship codes, spelling out how they will discharge their responsibilities under the code. All category of investors spend time and resources monitoring their investee companies: they attend quarterly analyst calls, have one-on-ones with company managements, go for factory visits. Depending on their size of investments, many even look at alternative information sources by contracting-in company/industry specific studies.
In contrast, investors have been unsure what to report and where to draw the line while reporting how they have been meeting their stewardship responsibilities.
As Indian regulators have not specified on any format/template/framework for reporting or the frequency of these reports, this document looks at global stewardship reporting and based on these, gives some simple examples on how investors may report on their stewardship activities.
It is important the funds report on their stewardship activities in an easy-to-understand format and not wait till they perfect what they want to disclose. They can expand on their reporting in subsequent quarters or years, depending on reporting cycle they choose.
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Note that the materials provided in this document are for general informational purposes only intended to help investors with a broad template/format on reporting on their stewardship activities. These materials do not, and are not intended to, constitute legal advice.