98% board resolutions get nod in CY18 despite rise in shareholders' dissent

Nearly 98 per cent of proposals put up before the company boards got a green signal in calendar year 2018 (CY18), despite a greater level of institutional investors casting their vote against the decision, suggest a report by Prime Database.

Of 716 resolutions proposed during CY18, 700 (98 per cent) got the approval even as institutional shareholders voted against them, courtesy high promoter holding in the companies, the report says.

“Data-wise, the number of resolutions where more than 20 per cent of institutional shareholders voted against the resolution increased by 14 per cent to 716 in 2018 from 629 in 2017 and 639 in 2016. However, resolutions where over 20 per cent of institutional shareholders cast a negative vote, for Nifty50 companies reduced to 36 in number, against 44 in the same period last year,” the report says.

According to Pranav Haldea, Managing Director, PRIME Database Group, a bulk of these resolutions were related to board appointments followed by stock options and board remuneration.

Among the prominent ones that were opposed by the institutional shareholders with over 20 per cent votes include re-appointment of Rajiv Bajaj in Bajaj Finance and re-appointment of Mr Craig Edward Ehrlich as an Independent Director of Bharti Airtel.

E-voting to the rescue

Haldea attributes the trend to the e-voting facility, which has been made mandatory a few years ago as also the stewardship code brought about by regulators. A 'stewardship code' is a principles-based framework that is designed to assist institutional investors and their stewardship service providers (including proxy advisors) in fulfilling their responsibilities to their clients.

"It is also attributable to a greater role being played by proxy firms as also a steady increase in institutional holding as a whole," Haldea adds.

In contrast, there were 45 resolutions which were completely voted against by shareholders at AGMs / EGMs / Postal Ballots and Court / NCLT Convened Meetings held in 2018, the report says.

Overall, a total of 12,972 resolutions were proposed to be passed in 2,478 AGMs, EGMs, Postal Ballots and Court / NCLT Convened Meetings of 1,744 companies that were listed on NSE as on January 1, 2018 – up 5 per cent from 12,341 resolutions in 2017.