Startup InGovern Releases Report; Corporate India Lags Way Below on Adherence to Best Practices

6th Nov 2012
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InGovern, India’s first independent proxy advisory firm recently launched the "India Proxy Season 2012 Analysis" report. It analyzes patterns in the resolutions proposed by Indian listed companies in the just concluded

2012 proxy voting season. Observations on routine and non-routine resolutions proposed by Indian companies have also been discussed. The data has been collated and analyzed from a coverage universe of 588 companies forming part of the S&P 500 and BSE 500 indices, which represent over 95% of the market capitalization of Indian listed companies. Management and shareholder resolutions passed in the Annual General Meetings (AGMs) held in 2012 for these companies have been analyzedKey Highlights of the Report:

Resolutions Analysis

  • A total of 4,271 resolutions proposed by 588 companies (Companies of the S&P 500 and BSE 500 indices which formed part of our coverage universe)
  • Of the 4,271 resolutions proposed in 2012 proxy voting season, there were 3,711 ordinary resolutions and 560 special resolutions. Further, 3,811 resolutions were proposed by management and 460 resolutions were proposed by shareholders
  • Most resolutions at AGMs passed through show of hands
  • 72% of the resolutions passed unanimously with the remaining passed with requisite majority; Six resolutions were withdrawn/amended

Corporate Governance Structure of Top 100 (Nifty and Junior Nifty) Companies

  • 10% of companies have board sizes of either more than 16 directors or less than 7 directors
  • 9% of companies were non compliant with Clause 49; with less than 50% Independent Directors, with no Independent Chairman
  • One in five Directors attend less than 75% of Board Meetings
  • 9% of Independent Directors have outside directorships in more than 10 public companies
  • 22% of IDs have served on the Board for more than 9 years
  • Audit Committees of only 45 companies comprise only of Independent Directors
  • 13 companies have not constituted a remuneration committee
  • 53 companies have had the same Auditors for more than five years

Shriram Subramanian, Founder and MD of InGovern said “Corporate India has a long way to go before adhering to corporate governance best practices. The data stands out with even top companies not treating CG practices in the right spirit. Institutional investors and regulators should demand better practices from promoters and company management. The new Companies Bill is a small step in the right direction.”

Download the full report here.

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