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Rise of shareholder activism

Infosys, Coal India, Akzo Nobel and Vedanta have run up against shareholders who are not afraid to ask searching questions, even if they happen to be minority shareholders. India Inc can no longer expect shareholders to remain calm if their rights are trampled upon. Not just big institutional investors, but even minority shareholders are now turning increasingly assertive to influence corporate decision-making. Recent developments in the financial markets and in business practices suggest a growing trend in shareholder activism, wherein investors attempt to influence management and corporate practices by raising uncomfortable questions to the top guns of India Inc. INSTANCES OF...
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Does your fund manager really protect your interest?

Earlier this week, 55% of the shareholders of Citigroup created a major flutter on Wall Street when they blocked a proposal to raise CEO Vikram Pandit's remuneration to $15 million for 2011 from a token $1 in 2010. American shareholders have a say on the pay of corporate executives and across the West, institutional shareholders take an active interest in the way managements run companies. Still, the Citi revolt took every Wall Street watcher by surprise. What about India? Investor activism is yet to take root here, and in the few instances where minority investors have intervened, they have had little...
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Cognizant institutional investor Lacera wants directors to be elected annually, not three-year term

BANGALORE: A tug of war between minority shareholders and the board of directors is brewing at Cognizant Technology Solutions, India's third-largest software outsourcing company. In Cognizant's upcoming June 5 annual shareholder meeting, institutional investor Los Angeles County Employee Retirement Association, or Lacera, which manages $39 billion in assets, is putting to vote a proposal at the shareholder meeting on June 5 to make it mandatory for all board directors to be elected annually, as against a three-year term at present. Cognizant has recommended that all shareholders vote against the proposal. Another activist investor John Chevedden has forced Cognizant to introduce a...
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Investors push for better corporate governance

New Delhi: Minority shareholders and independent directors are starting to make themselves heard by management and force a reversal of key decisions in what analysts say are small, but significant steps towards improving corporate governance standards in India. A rebellion at Coal India Ltd (CIL) last week in which independent board members and a minority shareholder challenged a government attempt to dictate terms to the state-owned miner is a case in point. In February, the board of paint maker Akzo Nobel India Ltd was forced to cut the royalty payable to its Amsterdam-based parent in a victory for small shareholders, who...
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Hedge Funds Go on Attack In India

[ACTIVIST]NEW DELHI—After years of complaining about poor treatment as minority investors in India's publicly traded companies, some Western hedge funds are turning to activist tactics that have not often been tried here. The recent moves may mark the beginning of a more confrontational period between foreign investors and Indian companies, which tend to be owned by either their founders or the government. Last week, the U.K. hedge fund The Children's Investment Fund Management LLP, which has $9 billion in assets and is famous for its tussles with companies, initiated legal proceedings against the Indian government to protect its investment in India's...
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Coal India’s independent directors discover their spines

Faced with the threat of legal action from shareholder activists, independent directors on board public sector companies are beginning to show some spine. According to reports in Moneycontrol.com and The Times of India, independent directors on the board of Coal India have blocked a proposal to sign 20-year fuel supply agreements (FSA) with power producers – a move initiated by the Prime Minister’s Office (PMO) and which was claimed as a big breakthrough for the power sector. Experts had questioned the economic sense of the proposal and blamed the PMO for passing on the costs of rescuing private power producers to...
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Minority investors protest delisting price for India Securities

MUMBAI: Minority shareholders of Essar Capital-promoted India Securities have said the floor price of Rs 56 a share set for its delisting is low and does not reflect the company's valuation. The delisting offer for India Securities, an investment vehicle formed specifically to transact the Essar Group's telecom business sale, opened on March 26. The promoter seeks to buy out 219.15 million equity shares, or about 25.02% stake, from public shareholders. The offer closes on March 28. Retail shareholders, led by a Kolkata-based company, have also said that the floor price is lower than the value at which an inter-se transfer...
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IGate faces battle over Indian unit delisting plan

NEW YORK/BANGALORE, March 23 (Reuters) - IGate Corp's plan to delist its Indian subsidiary has set the stage for a battle next week with shareholders, who fear that the price being offered to sell their shares in Patni Computer Systems is too low. Among the investors is hedge fund Elliott Management Corp, an activist shareholder that owns an 11 percent stake in Patni. A representative for the fund declined to comment. IGate, a maker of outsourcing software, bought a controlling stake in Patni for 503 rupees ($9.83) per share last year. The Fremont, California-based company now plans to buy the 19...
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ACG Boston's DealMakers 2012 M&A Outlook Conference

 

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The Association for Corporate Growth or ACG is the global community for middle market M&A dealmakers and corporate business community. The key takeaways from the DealMakers 2012 M&A Outlook Conference are summarized in this article.

 

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Mohandas Pai returns to shareholder activism

MUMBAI: Former Infosys director T V Mohandas Pai has returned to what he does best-promoting shareholder activism. Pai, now chairman of Manipal Universal Learning, has acquired a significant minority stake in InGovern Research Services, a proxy advisory services company, which helps institutional investors tackle corporate governance issues at listed companies. It was Pai's hard-hitting questions at Infosys shareholder meetings that drew the attention of the company's co-founders N R Narayana Murthy and Nandan Nilekani, who later invited him to join the management. Pai rose through the ranks becoming HR director before quitting the IT bellweather last year. His investment in...
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