Pranav Haldea: Resolutions rejected by stakeholders on the decline

As per the latest estimates by Prime Database, the number of resolutions since January 2016 where more than 20 per cent of institutional shareholders voted against the resolution, stood at 619 as on October 14, this year. Comparatively, 717 resolutions were voted against by over 20 per cent institutional investors in 2015, while the figure stood at 975 resolutions in 2014. Of the 619 resolutions rejected by the institutional investors, a vast majority (609) still got passed, mostly owing to high promoter holding. 

Most number of such resolutions were related to board appointments followed by auditor appointments and stock options, Prime Database said. “This reflects an improvement in the quality of resolutions being proposed at shareholder events. There has also been an increase in the participation of institutional investors, which is on account of the facility of e-voting being made mandatory a couple of years back,” Prime Database managing director Pranav Haldea said. “In view of this, there has been far greater public scrutiny of the resolutions forcing the companies to propose only such resolutions which are more likely to pass,” he added, while also noting that the new Companies Act as also the SEBI Listing Obligations and Disclosure Requirements, have brought about a renewed focus on corporate governance. 

There were 30 resolutions which were completely voted against by shareholders at AGMs/EGMs/Postal Ballots and court convened meetings held since January 2016. The figures for same period in previous years stood at 23 in 2015 and 27 in 2014.

“Of these 30 resolutions, no resolution was re-proposed to be passed (unlike previous years wherein a bulk of such resolutions were re-proposed to be passed,” Haldea said. However, it may be noted that companies may re-propose the same in the next 2-3 months. The analysis is based on 2,113 annual general meetings (AGMs), EGMs, Postal Ballots and Court Convened Meetings held by 1,542 NSE listed companies since January 2016.