Institutional EYE

Commentary on Corporate Governance Issues

Vascon Engineering: Time to dig deeper

There has been a sudden and steep fall in the share price of Vascon Engineers Limited this week, after it announced cancellation of the Compulsory Convertible Debenture issue. In two trading sessions the share moved down as much as 33%, with investors loosing around Rs 3000 million. Is the Board within its right to cancel the transaction? A preferential issue in a listed company, once agreed upon between a company and the investor, is only subject to shareholder approval (- and stock exchanges confirming that they will list). Once shareholders have accepted the offer, the consideration has to be received. Preferential shares have to be allotted within 15 days. The Vascon management or its b

Policy impact: 15 companies commit to a higher dividend payout ratio

Cash hoarding has plagued corporate India for long. Therefore, SEBI’s decision to mandate India’s top 500 to formulate and disclose a dividend policy has compelled corporate India to have a more considered capital allocation policy. Corporate India has responded well: 91 of the top 100 companies have a publicly available dividend distribution policy. Of these, 15 companies are likely to distribute a higher share of their profits as dividend. Indian companies have been hoarding cash. The cash (including liquid investments) on S&P BSE 500 companies’ balance sheets on 31-March-2016 aggregated Rs. 16.7 trillion. These companies, in FY16 announced aggregate dividends of Rs.1.8 trillion. IiAS’ Feb

Model Stewardship Code:For all Indian Institutional Investors- IiAS & Cyril Amarchand Mangaldas

Introduction Stewardship code is a set of principles or guidelines aimed primarily at institutional investors, who hold shares, and thus, voting rights in companies. Implying that it is part of the fiduciary duty of investors to behave as good owners of companies, stewardship codes require investors to monitor and, where necessary, engage with companies on material matters, including environmental, social, governance, strategy, performance and risk issues and to vote their shares at company AGMs and EGMs. Companies and investors have a symbiotic existence: companies need investors, just as much as investors need companies. Consequently, effective stewardship and effective governance go toget

For Gautam Singhania is an honourable man

Gautam Singhania’s recent message to shareholders is an attempt to disassociate himself from the transaction that allows the company to sell premium real-estate in Mumbai at throw-away rates to promoters – including Gautam Singhania himself. In doing so, IiAS contends that he abdicates responsibility for actions that were undertaken by the company – with the consent of the board – during his reign as the company’s Chairperson and Managing Director. Does Raymond Limited deserve a leader who is unwilling to take responsibility? The transactions relating to the signing of the contentious tripartite agreement were undertaken in November 2007. The decision to sign these agreements were made in tw

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