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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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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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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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