The AGM season just gone by saw the top 10 mutual funds, ranked by AUM, voice their dissent more than before, reports Nitin Shrivastava in Mumbai.
They voted against 1,814 or 6.43% of the proposals; in 2013, 41 MFs together had voted against fewer proposals.
The likes of IDFC, Franklin Templeton and SBI MF were particularly vocal, voting against 15.87%, 13.31% and 13.27% of total resolutions voted on, respectively. Frankin Templeton was the most active voting on 8,214 resolutions related to its domestic and foreign investee companies, of which it voted against 1,093. Shareholders were divided on resolutions relating to executive compensation, re-appointment of directors/ auditors, sale or transfer of assets / holdings to group companies and ESOPs.
MFs are now more becoming more active and objecting more than they did before to proposals of firms; a study by proxy advisory firm Ingovern, on the voting pattern for fiscal 2013, showed they had only voted against 1.5% (or 431) of the 28,290 resolutions proposed, abstaining in 51% of the cases.
United Spirits’ proposal to re-appoint Vijay Mallya was objected to by nearly all MFs?UTI, SBI, Birla Sun Life, Franklin Templeton, IDFC?they probably his being declared a wilful defaulter would hurt the company’s reputation.
Similarly JSW Steel’s proposal to pay a royalty of upto 0.25%, of the consolidated net turnover, as a brand licence fee to JSW Investments was objected to by IDFC and JP Morgan.
Most of the objections related to the re-appointment of auditors and independent directors, who had been associated with company for a long tenure. SEBI has asked MFs to diligently exercise their voting rights in the best interest of unit holders and has mandated, in a circular dated March 2014, that they disclose the rationale for such voting on their website within ten working days from the end of quarter.