Indian mutual funds are still largely passive and/or indifferent while voting at investee company shareholder meetings, shows an InGovern report.
Mutual fund houses have either voted in favor of proposals or have decided to largely abstain from voting in resolutions put forth by their investee companies, states a report titled “Mutual Funds Voting Pattern 2013 Analysis” released by InGovern.
SEBI, in its circular dated March 15, 2010 had mandated AMCs to publish their general policies and procedures for exercising the voting rights in respect of shares held by them in their portfolio companies, as well as report their voting decisions in the meetings of their investee companies.
The report says that mutual funds have disclosed a total of 5,460 meetings consisting of 3,724 annual general meetings (AGMs), 858 postal ballots (PBs), 323 court convened meetings (CCMs) and 555 extraordinary general meetings (EGMs) for the year 2012-13. Out of the total 28,290 resolutions disclosed, mutual funds have voted against 1.5% of the resolutions, whereas they have voted for in 47.0% of the resolutions and abstained from voting in 51.5% of the resolutions.
The number of instances where a mutual fund has voted against a proposal is very low. No significant improvements are seen in voting participation by AMCs in shareholder meetings compared to previous two years, says the report.
Here are some of the key highlights of the study:
- Indian mutual funds are still largely passive and/or indifferent while voting at investee company shareholder meetings
- 2 out of 43 mutual funds completely abstained from any voting for FY2012–2013 and hence have not made any voting disclosures
Some level of participation by mutual funds seen in resolutions that came under larger public scrutiny post negative recommendations from InGovern, claims the report.
The report makes the following recommendations:
- Need for mutual funds to adopt a more detailed set of voting policy guidelines to ensure better corporate governance practices at investee companies
- More regulatory oversight required for better institutional investor participation in shareholder meetings
Download Full Report: Mutual Funds Voting Patterns 2013 Analysis
