Sebi’s diktat asking the mutual fund houses to record specific rationale supporting their voting decision may not drastically bring down the high percentage of ‘abstain’ votes in the near future, believe experts.
?I don’t think Sebi’s diktat will bring about an immediate change in the voting pattern as it will take time for the fund houses to realise the importance of voting,? said Shriram Subramanian, founder, InGovern Research Services, a proxy advisory firm.
In FY13, mutual funds had voted ‘against’ just 1.5% of the 28,290 resolutions disclosed, whereas they had voted ‘for’ in 47% of the resolutions and ‘abstained’ from voting in 51.5% of the resolutions, according to a report by Ingovern last year.
Sebi in its recent circular had said that the AMCs shall be required to record and disclose specific rationale supporting their voting decision with respect to each vote proposal in order to improve transparency as well as encourage AMCs to diligently exercise their voting rights in the best interest of the unitholders. AMCs shall be required to make disclosure of votes cast on their website on a quarterly basis, within 10 working days from the end of the quarter.
?An analysis of the voting patterns of the mutual fund houses indicates that most Indian mutual funds have either voted in favour of proposals or have decided to largely abstain from voting in resolutions put forth by their investee companies. The number of instances where a mutual fund house has voted against a proposal is very low. No significant improvements are seen in the voting participation by AMCs in shareholder meetings compared to the previous two years,? observed the report.
?Sebi’s intention is to make fund houses realise that they have a slighty greater responsibility than just buying and selling of shares. The voting disclosures will improve transparency among fund houses,? said Arvind Sethi, CEO, Tata MF.