While the majority of the institutional shareholders voted in favour of Pallavi Shroff's re-appointment as independent director, the vote against it at 46.40% is ‘unusual and high’,say experts
Over 46% of institutional shareholders voted against the special resolution for re-appointment of Pallavi Shroff, regional managing partner, Shardul Amarchand Mangaldas, as independent director on the board of directors of Apollo Tyres. The resolution was passed with 79.08% of the total votes in favour and 20.91% against the motion at the shareholders meeting on March 19. Seventy five per cent of the vote is required for a special resolution to pass.
In the public institution category of shareholders, which includes FIIs and DIIs, 53.59% voted in favour of the resolution to re-appoint Shroff as independent director for five years, while 46.40% voted against the motion.
While the majority of the institutional shareholders voted in favour of the motion, the vote against it at 46.40% is “unusual and high,” according to experts. Amit Tandon, founder & MD, Institutional Investor Advisory Services India (IiAS), a proxy advisory firm, said: “46.4% institutional shareholders voting against is both unusual and high. Having said so, we are now starting to see investors express their view through their vote rather than their feet”.
Tandon said that there are more than 150 resolutions in the last 18 odd months where 20% or more of the institutional investors have voted against.
“Clearly, the expectations of shareholders have changed,” he added. Corporate governance experts point at a possible conflict of interest in Shroff’s appointment as an independent director at Apollo Tyres. Shriram Subramanian, founder & MD, InGovern, a corporate governance research firm, said: “We have always recommended voting against Pallavi Shroff as an independent director as there is a pecuniary relationship between the law firm and the company”.
Institutional shareholders in Apollo Tyres have a strong presence with around 44% holding, of which FIIs hold 20% and domestic institutions hold 24.3%. When contacted, Apollo Tyres did not offer any comments.