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A total of 12,219 resolutions were proposed to be passed in annual general meetings (AGMs), extraordinary general meetings (EGMs), postal ballots and court convened meetings of 1,616 NSE-listed companies between January 1 and December 22 this year, up from 11,583 resolutions in the same period last year, a rise of 5 per cent, data from Prime Database shows. This translates into an average of 5.32 resolutions per meeting and 7.56 resolutions per company.
Nearly 35 per cent, or 4,252 resolutions, were related to board changes followed by resolutions relating to the auditors (2,475).
The number of resolutions since January 2017 where more than 20 per cent of institutional shareholders voted against the resolution stood at 591 as on November 3. This number stood at 648 in CY16 and 759 in CY15.
Of these 591 resolutions, 578 got passed, mostly owing to high promoter holding, according to PRIME Database.Source: PRIME Database
There has been an improvement in the quality of resolutions being proposed at shareholder events, according to Prithvi Haldea, chairman of PRIME Database. There has also been an increase in the participation of institutional investors, on account of the facility of e-voting being made mandatory a couple of years back. 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.
"New regulations, including the Companies Act and Sebi's Listing Obligations & Disclosure Requirements, have brought about a renewed focus on corporate governance," Haldea observed.
As it happens almost every year, the bulk of the AGMs in 2017 happened in the month of September. "This is a disturbing phenomenon as studies have shown that a large majority of companies that have late AGMs are typically poor performers," said Haldea.
Thirty-nine domestic mutual funds, as a whole, voted in favour in 88 per cent of the resolutions, against in 2 per cent of the cases and abstained in 10 per cent cases between January and September 2017.
Globally, institutional investors, including activist funds, tend to collaborate and put pressure on the management for changes or look for changes in the top management. The level of collaboration among long-term institutional investors such as pension funds is even higher. In the US, for instance, it is common for funds to take a stand on issues such as climate change, board diversity and appointment of directors.