 "MFs opposed just 1.5% resolutions in 2012-13")
Mutual fund (MF) houses have voted against only 1.5 per cent of the total resolutions put forth by their investee companies during financial year 2012-13, shows an analysis done by a proxy advisory and corporate governance firm.
Of the 28,290 resolutions put to vote by companies, asset management companies (AMCs) voted against 431 (1.5 per cent) of the resolutions, voted for 47 per cent and abstained from voting in 51.5 per cent, according to an analysis by Bangalore-based Ingovern Research Services.
“The number of instances where a mutual fund has voted against a proposal is very low. No significant improvements are seen in voting participation by AMCs in shareholder meetings compared to the previous two years,” Ingovern said in a report on MF voting pattern.
The Securities and Exchange Board of India (Sebi) in 2010 had mandated all AMCs to disclose their policies and procedures on their websites and annual reports for votes exercised by them in investee companies during every financial year.
In the past three years, mutual funds have made little progress, as they continue to be largely passive or indifferent while voting at an investee company’s shareholder meetings, observes Ingovern.
“Two out of 43 mutual funds completely abstained from any voting for 2012-13 and, hence, have not made any voting disclosures. Some of the mutual funds have disclosed their voting information incorrectly even in the 3rd year of reporting,” it said.
The corporate governance firm is of the view that MFs will have to put in place a detailed voting framework to ensure better corporate governance practice in companies they invest in.
Of the 28,290 resolutions put to vote by companies, asset management companies (AMCs) voted against 431 (1.5 per cent) of the resolutions, voted for 47 per cent and abstained from voting in 51.5 per cent, according to an analysis by Bangalore-based Ingovern Research Services.
“The number of instances where a mutual fund has voted against a proposal is very low. No significant improvements are seen in voting participation by AMCs in shareholder meetings compared to the previous two years,” Ingovern said in a report on MF voting pattern.
The Securities and Exchange Board of India (Sebi) in 2010 had mandated all AMCs to disclose their policies and procedures on their websites and annual reports for votes exercised by them in investee companies during every financial year.
In the past three years, mutual funds have made little progress, as they continue to be largely passive or indifferent while voting at an investee company’s shareholder meetings, observes Ingovern.
“Two out of 43 mutual funds completely abstained from any voting for 2012-13 and, hence, have not made any voting disclosures. Some of the mutual funds have disclosed their voting information incorrectly even in the 3rd year of reporting,” it said.
The corporate governance firm is of the view that MFs will have to put in place a detailed voting framework to ensure better corporate governance practice in companies they invest in.
Experts say more active participation by MFs and other institutional investors could play a vital role towards protecting minority shareholder interests and ensure better corporate governance among listed companies.