The Securities and Exchange Board of India (Sebi) has asked proxy advisory firms to formulate the voting recommendation policies and include the viewpoint of the companies in their reports to investors and clients.
Proxy firms advise shareholders mainly on corporate governance-related issues and assist them in voting on resolutions.
Stating that proxy firms need to follow some “procedural guidelines,” Sebi said proxy advisors should share their report with clients and the company at the same time. “This sharing policy should be disclosed by proxy advisors on their website. Timeline to receive comments from the company may be defined by proxy advisors and all comments/clarifications received from the company, within the timeline, shall be included as an addendum to the report,” the markets regulator said.
The proxy advisory firms must ensure the policies should be reviewed at least once annually, Sebi said. As per Sebi, if the company has a different viewpoint on recommendations stated in the report of the proxy advisors, then proxy advisors, after taking into account the said viewpoint, may either revise the recommendation in the addendum report or issue an addendum with its remarks.
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