The July-September quarter saw hectic activity as companies put hundreds of resolutions to vote at their annual general meetings.
Minority investors voted out resolutions on pay for the top management of Tata Motors in early July. The move sent shock waves around the corporate sector, bringing home the impact of rules governing related-party transactions in the new Companies Act.
Proxy firms pointed out companies should bring more granularity to compensation policies and should not club resolutions for remuneration with those for reappointment.
"What also changed this quarter was the active participation of investors," Institutional Investor Advisory Services (IiAS) said in a report.
The proxy firm referred to two cases where shareholders decided to challenge company managements.
In PTL Enterprises, the promoters decided to sell a major business to themselves in a related-party transaction that favoured the management. "Shareholders approached courts and succeeded in obtaining a stay on the sale of the business," IiAS said.
In Panacea Biotech, there was a call to arms by shareholders in what to them appeared as mismanagement and questionable use of funds.
As tighter regulation under a new Sebi listing agreement approached in October, companies raised their concerns with the government and the regulator. Two rounds of dilution by the ministry of corporate affairs and a corresponding dilution by Sebi followed.
These enabled some companies to sidestep opposition by minority investors. A resolution by the JSW group to pay an entity owned by its promoter's wife a significant sum for brand promotion came under scrutiny after another proxy firm, Stakeholders Empowerment Services (SES), called it an abusive related-party transaction. SES had also recommended voting against the Tata Motors remuneration.
However, the JSW promoters used the ministry of corporate affairs relaxation regarding related-party transactions and saw the move through. With the new listing agreement coming to force from October 1, such transactions will now come to shareholders for a vote. Several concerns were also raised against United Spirits' treatment of loans to entities related to its chairman Vijay Mallya.
"We believe this is just the beginning, there will be more such instances where investors stand up and hold managements accountable," IiAS said in a recent report. One instance of intense shareholder activism was against the Maruti Suzuki decision to invest in a plant in Gujarat. The decision is likely to come up for minority investor approval in November.