Ritika Kishore, O.P. Jindal Global Law University, Sonipat
ABSTRACT
This paper highlights on the growing “emergence of Proxy Advisory Firms” in the Indian Context and their key contribution to the rising shareholder activism. It also discusses the challenges and loopholes present in the current regime by their increasing influence. The first part discusses about the SEBI regulations and guidelines outlined for the functioning of “Proxy Advisory Firms”. SEBI also enlists the “Grievance Redressal Mechanism” available to listed entities for raising red flags on non compliance of these Regulations in place. The nature of impact following the Circulars outlined by SEBI has also been addressed. Excessive concentration of power in the hands of proxy advisors have created problems of Conflict of interest stemming from rendering both consultancy and advisory services, Robo- Voting, Fiduciary duty of institutional Investors and the “impact on Shareholder Voting results”. These aspects have been debated by Scholars and market participants to a large extent and have contributed to shareholder activism. However, the impact of existing regulations remains to be seen at its nascent stage and may call for speculation in the times to come.
Keywords: Proxy Advisory Firms, Conflict of Interest, Fiduciary Duty, Robo- Voting, Shareholder Activism, Institutional Investors
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