Institutional EYE

Commentary on Corporate Governance Issues

A field guide to shareholder redressal in India

February 2, 2016

Indian equity shareholders are increasing their proactive engagement with companies. A new class of investors are vocalizing their opinions and casting their vote, rather than exiting their shareholding at the first whiff of a disagreement with management decisions. In just the past one year, 37 resolutions have been defeated by shareholders.

 

Changing regulations that empower shareholders, and proactive shareholder engagement are key reasons for this change.

For long, retail investors were large holders in equity – but over the last decade, the retail has given way to FII’s and domestic mutual funds, accountable in turn to their depositors. Anecdotal evidence from other geographies suggests that once institutions approach 30% ownership, their engagement with companies deepens. Institutional holdings in India are now at this level. This enables shareholder engagement to become meaningful in its impact.

 

IiAS presents a practical guide for shareholders (including private equity that owns shares in unlisted companies), to protect themselves against corporate malfeasance. The guide also details some recent and a few older cases of shareholder-management dialogue.

This guidebook is a part of IiAS ongoing initiatives to help shareholders assert their rights and improve governance standards in India.

 

You can read the report ‘A field guide to shareholder redressal in India’ by clicking on this link.

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