Only 1.5 per cent of total proposals put forth by listed companies have been opposed by mutual funds in 2012-13 even as Sebi has been asking fund houses to exercise their voting rights and act as 'guardians for small investors'.
The data suggests that mutual funds are still a passive investor and are "largely indifferent" towards the corporate governance practices of investee company, according a report by InGovern Research Services based on proxy voting disclosures.
Out of the total 28,290 resolutions disclosed, mutual funds have voted against just 431 proposals (1.5 per cent), whereas they have voted in favour of 13,278 (47 per cent) and abstained from voting in 14,581 proposals (51.5 per cent).
Among 43 mutual fund companies, two of them have completely abstained from any voting and hence have not made any voting disclosures on their websites/annual reports.
According to norms, it is mandatory for fund houses to make public their votes on proposals put out for shareholders' approvals.
Many mutual fund houses, including large players like Reliance Mutual Fund and smaller ones such as Quantum MF, opposed certain proposals made by companies like Sun TV Network Ltd, Escorts, Jindal Steel, JP Associates, Pantaloon, ACC, Ambuja Cements Ltd and Gammon India.
The proposals that were opposed mostly included those related to top-brass salaries, payments or guarantees to promoters, and transactions involving group companies.
However, the quantum of proposals that have been opposed by the mutual funds still remain small when compared to the instances of fund houses either abstaining from voting or supporting the management's stand.
Market regulator Sebi has been persistently asking fund houses to exercise these voting rights and act as 'guardians for small investors' by taking a stand against company proposals that could be against the interest of minority shareholders.
Sebi Chairman U K Sinha recently said the capital markets regulator would take up the matter with other regulators soon in this regard, so that institutional investors can act as 'guardians' for small investors and become their voice at shareholder meets.