Institutional EYE

Commentary on Corporate Governance Issues

The Last Minute 2016-17: The scramble continues

In the fifth edition of IiAS’ study on timelines of Annual General Meetings (AGMs) of S&P BSE 500 companies, we continue to conclude that there is a correlation between performance and the timing of the AGM: the later the AGM, the weaker the performance. IiAS believes corporate India can improve, and must be better structured to close their books, publish their annual reports, and hold their AGMs sooner. The Kotak Committee on Corporate Governance has taken the first step in addressing this by advocating that the top 100 listed companies by market capitalization hold their AGMs within five months of the financial year-end. If accepted, 28 of the top 100 companies which held their AGMs in Sep

Shareholders have the power to compel change

A change is underway in the Indian markets. Investors want their voice heard. In recent times, shareholders have asked for board seats: Unifi Capital asked for a board seat in Alembic Limited, and Florintree Advisors has asked for a board seat in PTC India. And, in extreme cases, shareholders have asked for complete board refreshment: India Horizon Fund together with IDBI Trusteeship moved the Delhi Bench of the National Company Law Tribunal to seek the ouster of Religare Enterprises Limited’s board for mismanagement and oppression of minority shareholders. In response to the leadership crisis at Infosys, mutual funds wrote a joint letter to Infosys’ board members asking them to consider bri

SEBI Corporate Governance Committee: Taking the next step

The SEBI Committee on Corporate Governance, chaired by Uday Kotak, submitted its final report today. The recommendations are aimed at achieving the dual objective of shareholder protection and long-term value creation. The proposals cover a diverse set of items. They push corporates towards improving board effectiveness, enhancing oversight over group entities, tightening control over related party transactions, providing timely disclosures, increasing focus on audit quality, and facilitating investor participation. The proposed recommendations are grounded in market realities, and benchmark governance practices with local and global practices. The report builds on the existing legal framew

Investors can – and must define governance practices

Earlier this year IRDA asked insurance companies to roll out their Stewardship policies by 30 September. In the month that most insurance companies uploaded their stewardship codes on their websites, The Vanguard Group published its Annual Stewardship Report. This report is a clear pointer to investors in the Indian market regarding then power of a stewardship code. Investors can – and must use these to define governance practices. A few weeks ago, F. William McNabb III Chairman and Chief Executive Officer of The Vanguard Group, an investment manager with US$4.4 trillion under management, wrote an open letter to the directors of public companies worldwide. This was accompanied with their Inv

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