Shareholder activism: Indian investors are becoming more vocal now more than ever before

Shareholder activism has gained a lot of traction in many markets across the world and India is no different. An increasing number of institutional shareholders are standing up to the promoters and opposing any move they feel is not in the best interest of the company or public shareholders.

Data from Stakeholders Empowerment Services or SES, a proxy advisory firm, shows that the number of resolutions wherein a significant number of institutional shareholders have voted against has risen over the years.

In the current calendar year, there have been more than 1,200 - 1,284 to be precise - resolutions that saw more than 10 per cent of the institutional shareholders opposing it.

This is a sharp jump from 2017 when only 763 resolutions faced a similar quantum of opposition from the institutional shareholders.

Further, there were 335 resolutions that faced opposition from more than 50 per cent of the institutional shareholders in 2021 - again much higher than 203 such instances in 2017.

Meanwhile, a total of 33 resolutions got rejected in the current calendar year, which is lower than last year's 36 but still higher than 19 such instances that occurred in 2017.

Interestingly, it is not just that institutional shareholders are making their vote count to oppose the resolutions. The overall percentage of resolutions wherein such shareholders have participated in any matter has also increased over the years.

In 2021, 82 per cent of all resolutions saw participation from institutional shareholders wherein this number was pegged at just 69 per cent in 2017. In 2020, 76 per cent of all resolutions saw institutional participation.

In terms of recommendations, SES provided an opinion on a total of 6,210 resolutions this year till September. Of these resolutions, the proxy advisory firm recommended opposing 1,471 while 4,692 got its approval in the form of a 'for' recommendation.

Last year, it had recommended opposing a total of 1,092 resolutions while releasing a 'for' recommendation for 4,436 resolutions.

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