1 June 2023: IiAS today published its annual compilation of ‘Voting Data and Outcomes for the NIFTY 500 Companies’ for 2022.
For the year under review, promoters held 50.45% in NIFTY500, institutional investors owned 28. 42% percent, with others holding the balance 21.14%.
The promoters voted 85.22% of their shares, much lower than 92.67% of the shares voted during 2021. While it is expected that promoters will vote all their shares, it is not so: there are resolutions in which promoters as interested or related parties do not get to vote. Of the votes cast by promoters, 99.85% were in favour of the resolutions proposed, while 0.15% were against.
Institutional investors polled 83.57% of the shares they own, marginally more than the 82.26% voted the previous year. Of the votes cast by institutional investors, 93.68% were in favour of the proposed resolutions, while 6.31% were against.
The ‘others’ an amalgam of various types of investors, hold not just the lowest percentage of equity but polled 29.01% their shares, which while higher than the 26.31% voted the previous year, remains very low. As with promoters and institutional investors, 99.12% (99.09%) of their votes were in favour of the proposed resolutions, while 0.88% (0.91%) were against.
In aggregate, of the shares held, 72.87% were voted on in 2022, implying promoters accounted for 59.0% of the total shares voted, institutions 32.6% and others just 8.4%. Aggregating the votes cast 97.8% of the votes are FOR and just 2.2% AGAINST.
The data shows that the likelihood for ordinary resolutions being approved is extremely high. And though special resolutions and those requiring majority of minority votes give the minority investors an edge, the default outcome remains that such resolutions will get approved. Consequently, of the 4991 resolutions put to vote, 24 were defeated, with a majority being approved.
In contrast, institutional shareholder dissent across resolutions is increasing, reflecting their changed approach: where previously the focus was on financial numbers, many now focus on compensation, capital allocation and transparency.
Way forward IiAS’ analysis points to the need for regulators to re-examine recategorizing some resolutions from ordinary to special.
With regard to disclosures, , India is ahead of other countries. It is the only geography that requires institutional investors to disclose their voting rationale. We can further build on this by mandating that the voting rationale be made mandatory for a few more categories of investors including corporates, trusts and private equity.
The voting disclosure itself needs to be more granular. Currently all institutions are clubbed; disclosures across a various sub-category – mutual funds, insurance companies, pension funds, alternate investment funds and foreign institutional investors, corporate bodies, and retail.
Finally, there is a need to step up the periodicity of the voting disclosure by funds. These are currently quarterly and can be within a week of the vote being cast. A faster dissemination will provide a quicker feedback-loop between companies and investors and increase the engagement between the participants.
THE YEAR IN NUMBERS
The NIFTY 500 companies:
Voting by institutional investors
Click here to read the report
Click here to view the data