India Inc can move Sebi over grievances against proxy advisors

Experts said move is expected to improve accountability at proxy advisory firms who have gained clout in influencing how minority shareholders vote on resolutions

The Securities and Exchange Board of India (Sebi) on Tuesday said listed companies having grievances against proxy advisory firms can approach the regulator. 

“Sebi will examine the matter for non-compliance by proxy advisors with the provisions of the Code of Conduct under regulation 24(2) read with regulation 23(1) of the SEBI (Research Analyst) Regulations, 2014 and the procedural guidelines for proxy advisors,” the market regulator said in a circular on Tuesday. 

The circular comes a day after Sebi issued the procedural guidelines. Experts said the move is expected to improve accountability at proxy advisory firms who have gained clout in influencing how minority shareholders vote on resolutions floated by India Inc. 

“Proxy advisors, over the past few years, have played a key role in enabling shareholders to effectively participate in corporate governance decisions…However, due to the inherent nature of the work, it is probable that proxy advisors and listed entities may have different views on any agenda item of the listed entity leading to grievances,” Sebi has said. 

The procedural guidelines issued on Monday are aimed at bringing in more transparency, avoiding conflict of interests and giving companies a chance to provide their viewpoint.