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Proxy advisory firms give a boost to shareholder activism

Long restricted to lone rangers, shareholder activism is now more structured, analytical and sophisticated Mumbai: For the last 27 years, Tamal Kumar Mazumdar has been attending the annual general meetings (AGMs). In the last 10 years, he has begun travelling from his hometown Kolkata to Mumbai and Delhi to be in the shareholder meets of some of the 120-odd listed companies in which he holds shares. Prior to these meetings, Mazumdar, 47 and an independent financial analyst, spends weeks poring over annual reports. He often ends up as the lone dissenting voice in the large auditoriums that typically host these meetings...
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Shareholder's voice gets louder

The general feeling that shareholders in India prefer to keep mum rather than voice their protests and can normally be silenced with a generous dividend seems to be changing.   Stanza 481 of the Tamil Classic Thirukkural states that “at the right opportunity, the king could succeed easily in his campaigns”. It emphasises the choice of right time and opportunity, especially by an administrator, to attain success. Shareholders appear to be thinking that this is the right time to take on corporate India and ask the management questions that could embarrass them. A few months ago, The Children Investment Fund (TCI) took...
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MFs take activist stance at shareholder meetings

The voting records of top equity mutual funds in the country show that some of India’s top mutual funds have started taking an activist stance. While some other funds either voted in favour of company resolutions or abstained from voting, RelianceMutual Fund’s and SBI Mutual Fund’s voting pattern showed they spent time studying the resolutions and voted against some of the resolutions proposed by companies’ management. Voting by mutual funds in annual general meetings (AGMs) and extraordinary general meetings (EGMs) for portfolio companies are to be disclosed on their websites as per a Securities and Exchange Board of India (Sebi) directive....
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Investor advisory firm seeks change in Infosys’ auditors

Minority shareholders are in a fighting mood. A few months ago, The Children Investment Fund (TCI) took the Coal India management to task for kowtowing to government babus on matters like pricing and fuel supply agreements. But now activism is being ignited on many fronts, by many players. Institutional Investor Advisory Services India Ltd (IIAS), which advices institutions on corporate issues, has advised shareholders of Infosys, which held its annual general meeting on Saturday (9 June), to vote against a resolution seeking the reappointment of its statutory auditors BSR & Co. According to a Business Standard report, IIAS  has recommended that ...
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Shareholder rights

As a shareholder, Templeton Asset Management has raised some good questions about the Vedanta group’s consolidation plans. It is concerned that the amalgamation of Vedanta Aluminium into Sesa Goa as part of the merger plans within Vedanta Resources will create a sizeable debt overhang for Sesa Goa without bringing in any major benefit, as the two companies operate in different sectors. Since the deal was announced in February this year, there is a reasonable ground to question why it took the investor such a length of time to come up with the observations. But as Sesa Goa has called for a...
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Will UK's ‘Shareholder Spring' last?

Will Britain's so-called Shareholder Spring — the spate of investor rebellions against ultra-generous pay packages, which has already resulted in the ousting of a couple of chief executives — lead to tangible long-term change? Concern about out-of-step executive pay has rumbled under the surface for decades. Over the years, irate shareholders raising questions about huge pay settlements have been a fairly common sight at AGMs, though these were often protests by solitary agents, treated with embarrassed silence from other investors. British investors have gained a pretty passive reputation, as the Ownership Commission chaired by economist Mr Will Hutton, recently noted. “The...
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Reebok India accuses former top execs of $157 mln fraud

Reebok India, owned by Germany's Adidas (ADSGn.DE), lodged a police complaint against two former top executives accusing them of fraud that had led the company to lose 8.7 billion rupees. The alleged fraud would be the most high-profile corporate scandal in India since 2009 when Satyam Computer's former chairman and founder Ramalinga Raju revealed that the company had overstated profits and falsified assets for years. Reebok India is accusing former India Managing Director Subhinder Singh Prem and former Chief Operating Officer Vishnu Bhagat of financial wrongdoing, said police officials in Gurgaon, where the complaint was filed. "Our criminal complaint has been...
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Shareholder activism: Will Infosys shareholders take lead?

Shareholder activism is common in developed markets. It is a push for shareholder friendly actions like higher dividend pay or buybacks by institutional investors like pension funds, provident funds, mutual funds, hedge funds or private equity funds. These institutional investors often own minority stakes in companies. They can collectively take a stand on (for or against) decisions taken by the management or the board of directors of a company.   A section of Infosys shareholders have called for a leadership change at the top to stimulate revenue and profit growth in the company.   Here are pointers to help you comprehend the trend:...
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UBS shareholders set to rebel over pay

(CNN) -- A significant number of investors are preparing to confront the management of UBS on Thursday by voting against the Swiss bank's 2011 pay award and denying executives formal approval of their actions. The bank's share price dropped 28 per cent last year and it lost $2.25bn in a rogue trade in London that caused the largest unauthorised trading loss on record in Britain. For the same period, the bank chose to pay 12 members of its executive board SFr70.1m ($77.1m) compared to SFr91m in the year before. That has prompted advisory groups and institutional investors including ISS, Ethos, F&C...
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