Mumbai—CFA Institute, the global association of investment professionals that sets the standard for professional excellence, andits member society in India, the Indian Association of Investment Professionals (IAIP), have launched“An Investor’s Guide to Shareholder Meetings in India”. This joint project aims to help minority investorsexercise the enhanced rights they now have to influence management decisions in the companies which they invest.

Retail and institutional shareholders in Indiahave tended to be passive investors. With many companies in India controlled by a single majority shareholder, minority shareholders are seen to have no real power to affect the outcome of corporate decision making.However, Indian regulators have recently changed key rulesto improve corporate governance standards andgive greaterpower to minority shareholders to monitor, participate, and acton major corporate actionsduring shareholder meetings.

“At CFA Institute, we truly believe that minority shareholders can play an effective role in building more efficient and equitable capital markets. We are delighted to see the recent changes in India’s new Companies Act, 2013, and Clause 49 of the Listing Agreement – this is a step in the right direction. Our guide will help to educate investors about these recent changes, empower them to exercise their enhanced rights, so that they can engage effectively with companies,” said Padma Venkat, CFA, directorof Capital Markets Policy in Asia Pacific, CFA Institute.

The guide is meant to:

• encourage minority shareholders to participate actively to ensure their interests are not unduly diluted;
• serve as a reference for minority shareholders to better understand the nature of shareholder meetings, including the activities, procedures, and rules of etiquette in the meetings;
• help minority shareholders analyseinformation relating to common resolutions so that they can ask the right questions to management and make an informed vote; and
• encourage companies to become more responsible toward the interests of minority shareholders and be more responsive to their actions.

At the launch eventof the guide on July 2,  in which a panel of financial industry experts took part in a discussion themed “More Info, Greater Power, What’s Next for the Indian Investor?”, Navneet Munot, CFA,IAIP board member and the director of its advocacy committee, said, “The industry is optimistic that recent sweeping changes to corporate governance regulations will boost investor confidence in India, especially reforms that empower minority shareholders through e-voting, enhanced disclosures on remuneration that are aligned with global best practices, and independent shareowner approval for related-party transactions. Given India’s large and growing need for risk capital, regulatory reforms and better enforcement are critical for market integrity and building investors’ trust.This guide helps us take another step towards protection of investor rights.”

CFA Institute contracted with Institutional Investor Advisory Services India Limited (IiAS), a proxy advisory firm, to conduct research on the latest regulatory developments and support the creation of this guide.

Source : Sachin Murdeshwar