NEW DELHI : Taking a big leap from murmurs at ‘chai-samosa parties’, shareholders made their voice heard loud and clear in 2014 with support from regulators, as they were seen vetoing cushy deals of promoters and fat pay packages of top executives.
After stopping quite a few controversial related party deals and forcing better transparency on corporate governance matters this year, the shareholder activism is expected to gain further momentum in the new year, as minority investors — including individuals, FIIs, mutual funds and insurance firms — get more serious about their voting power.
Rightly summing up the trend, regulator for over 5,000 listed companies Sebi’s chairman U K Sinha said that things are changing for good and shareholder and board meetings were no more like ‘chai-samosa parties’, as investors and independent directors were making their voices heard.
He also called upon the institutional investors to become more active and act like ‘guardians’ for smaller shareholders, while voting for the proposals made by the company management.
With stringent corporate governance regulations helping their cause, the emboldened shareholders made the right noises forcing the likes of Maruti, Tata Motors and United Spirits to either re-work or scrap certain proposals.
Mutual funds became more active as stakeholders in companies, especially after Sebi asked them to disclose the rationale for their voting decisions. In addition, they are required to make such details public every quarter.
“Shareholder activism will only increase in 2015 and will help in ensuring better corporate governance practices,” Association of Mutual Funds in India (AMFI) Chairman Sundeep Sikka said.
Sikka, also CEO of Reliance Mutual Fund, emphasised that small and retail investors should get a fair voice as well as representation.
“In terms of shareholder activism, mutual funds are playing a big role as custodians of small investors… It is a very good trend,” he noted.
Describing shareholder activism witnessed in 2014 as a “big change”, proxy advisory firm Institutional Investor Advisory Services (IiAS) said it has been quite a remarkable year.
“Shareholders are getting more engaged and participative. Companies are listening to them… Last year it (activism by shareholders) was a murmur and now it is a shout,” IiAS Founder and Managing Director Amit Tandon said.
Right from setting up a new plant to paying higher executive compensation to related party deals being voted out, shareholders ruled the roost in 2014. (AGENCIES)
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