Lessons from HDFC

Widely-held shareholding is not the ideal solution

Last week’s voting on a special resolution seeking the reappointment of a few directors at HDFC has turned the spotlight on the risk in programmed voting by custodians who act on behalf of foreign portfolio investors and depend entirely on the recommendations of a handful of proxy advisory firms based overseas. Two senior directors of HDFC, former Reserve Bank of India Governor Bimal Jalan and chartered accountant Bansi Mehta, who had offered themselves for reappointment, resigned just before the annual general meeting after two proxy firms asked investors to vote against them. The third, Deepak Parekh, barely managed to get