On Tuesday, 4th August 2020 the Market regulatory said that Listed Company can approach SEBI to resolve grievances against proxy advisors, who advise shareholders on corporate governance issues and assist them with a voting recommendation.
According to the Securities and Exchange Board of India (SEBI), this will be applicable from 1st September 2020.
The regulator noted that proxy advisors, over the past few years, have played a key role in enabling shareholders to effectively participate in corporate governance decisions Proxy advisors provide advice to institutional investors or shareholders of a listed entity, in relation to exercise of their rights in the company including a voting recommendation on agenda items.
SEBI said, However, due to the inherent nature of the work, it is probable that proxy advisors and listed entities may have different views on any agenda item of the listed entity leading to grievances.
The Regulator added, “In order to facilitate the resolution of such grievances of listed entities against SEBI registered proxy advisors, the listed entities may approach SEBI.”
The SEBI will examine the matter for non-compliance of proxy-advisors with the provisions of the code of conduct specified under Research Analyst Regulations and the procedural guidelines for proxy advisors.
On Monday, 3rd August 2020 SEBI came out with procedural guidelines for such advisors. Under the guidelines, they have to formulate the voting recommendation policies and disclose the updated voting recommendation policies to clients.
The proxy advisor firms ensure that the policies will be reviewed at least once annually.
The voting recommendation policies will also mention when not to provide such recommendations.