The Securities and Exchange Board of India (SEBI) this week (16/03/2010) asked mutual funds to disclose their proxy voting procedures on their websites and in their annual reports with effect from the 2010-2011 fiscal year.
Additionally it has asked funds to disclose their actual proxy votes in annual and extraordinary general meetings of investee companies in terms of changes in capital structure, stock option plans, social and corporate responsibility issues, appointment and removal of directors, merger/corporate restructuring and anti-takeover provisions.
Disappointingly, SEBI appears to have missed a golden opportunity to improve the quality of proxy voting disclosures and instead is focused on producing lists of votes dispatched rather than asking for a detailed rationale of the thought process behind the voting decision. The format of the disclosures has strong echoes of the US’ form NP-X and merely requires a fund to display a list of all meetings and all resolutions, the management recommendation and how the fund actually voted. Shareholder resolutions are reported on separately but in the same format.
Expect another explosion of box ticking.