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Shareholder dissent in Nifty-50 companies, where more than 20 per cent of institutional shareholders expressed their disagreement through negative votes, decreased by 30 per cent during the period from April 1, 2023, to September 30, 2023.
According to data from PrimeInfoBase.com, in the same period last year, there were 63 dissenting resolutions, representing 11.19 per cent of the total voted resolutions. This year, the number dropped to 44, accounting for 9.24 per cent of the total resolutions presented.
In the first half of the fiscal year 2023-24 (FY24), there were 1498 resolutions in NSE-listed firms against which more than 20 per cent of institutional shareholders voted. This accounts for 17.36 per cent of all resolutions for which voting details were available, a slight increase from the 1492 resolutions (16.88 per cent of total resolutions) in the same period last year, and 1041 resolutions (15.67 per cent of total resolutions) in 2021-22.
Like in previous years, the most number of such resolutions were not voted in favour by institutional investors related to board changes and remuneration, said PrimeInfoBase.
According to Pranav Haldea, Managing Director, PRIME Database Group, this is an encouraging sign as it shows that companies have finally started taking cognizance of minority shareholders’ interests and are also engaging with investors to understand their concerns prior to proposing resolutions.
“Credit for this needs to be given to the facility of e-voting being made mandatory a few years back, the stewardship codes which have been introduced by regulators, a greater role being played by proxy firms as also a steady increase in institutional holding as a whole courtesy the minimum public shareholding requirement,” Haldea said.
On an overall basis, the first half of FY24 saw a total of 12,547 resolutions proposed in 2,515 shareholder meetings of 1,882 companies listed on NSE (Main Board) as of September 30, 2023. This represented a 5 per cent decrease compared to the same period in 2022-23 when 13,228 resolutions were proposed in 1,789 companies.
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The resolutions in the first half of the FY24, include 1,869 Annual General Meetings (AGMs) with 11,174 resolutions in 1,867 companies, averaging approximately 5.98 resolutions per event and company, 96 Extraordinary General Meetings (EGMs) with 237 resolutions in 86 companies, averaging 2.47 resolutions per event and 2.76 resolutions per company and 523 Postal Ballots featured 1,109 resolutions in 467 companies, averaging 2.12 resolutions per event and 2.37 resolutions per company.
Additionally, Court/NCLT Convened Meetings comprised 27 events with 27 resolutions in 23 companies, averaging 1.00 resolutions per event and 1.17 resolutions per company.
These resolutions covered various categories, with the highest number related to board changes, followed by financial results, board remuneration, auditors, key managerial personnel, dividends, MoUs/agreements, memorandum & articles of association, investment/loan limit, and subsidiary.
Despite the decline in the number of dissenting resolutions, the vast majority of these resolutions (96 per cent) ultimately passed, according to the report. A high promoter holding in these companies often played a crucial role in this outcome.
A smaller portion of resolutions (85 resolutions or 0.68 per cent of the total) faced complete opposition from shareholders at meetings held in the first half of 2023-24, marking a 13 per cent increase from the same period last year (75 resolutions or 0.57 per cent of the total).
Some of these resolutions were re-proposed for approval, and the final outcome is yet to be determined for a few, the report noted.
The breakdown of voting by shareholder type revealed that promoters voted for the majority of resolutions (94.65 per cent), while institutional shareholders and other public shareholders voted at 71.86 per cent and 15.91 per cent, respectively.
The PrimeInfoBase data also shed light on the prevalence of resolutions related to Related Party Transactions (RPTs), with more proposed in the first half of 2023-24 compared to the same period in 2022-23. While 11 per cent of these resolutions saw more than 20 per cent of institutional investors voting against them, only 1.28 per cent of them were defeated.
