Next reform: e-voting at corporate AGMs for small investors

By Sourav Majumdar

If the founder of India’s first proxy advisory company (PAC) for institutional investors, Anil Singhvi, has his way, small shareholders may be able to vote at annual general meetings (AGMs) sitting in their homes.

Singhvi, whose company Institutional Investors Advisory Services (IIAS), is India’s first PAC and will advise institutions and eventually small shareholders on taking informed decisions on corporate actions, says his firm plans to take up the issue of e-voting with the regulatory authorities. This will enable smaller shareholders to vote on key corporate resolutions without having to physically attend AGMs.

The Tata Group, HDFC, Bombay Stock Exchange, Fitch Ratings and HDFC have recently picked up close to 74 percent in IIAS, signalling an important development in the space of institutional activism in the corporate space. Former Fitch Ratings India MD Amit Tandon also holds a stake in IIAS.

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In an exclusive interview with Entrepreneur magazine, Singhvi, who was formerly CEO of Gujarat Ambuja Cements Ltd (GACL) and is known as one of the best financial brains in the country, said: “There is no reason why smaller shareholders cannot vote on resolutions at the click of a button. Today’s AGMs are a charade. Some shareholders who are close to the managements go and sing songs and recite poetry in honour of the managements. This nonsense must stop. Shareholders must be made aware of resolutions affecting their investments and the voting process must be made easier. Smaller shareholders must have the facility of logging on to a company’s website and voting on resolutions.”

Singhvi’s firm came into the limelight after it raised a number of questions during the $3.7 billion Piramal Healthcare deal with Abbott Laboratories. Shareholder activism is still nascent in India and institutional shareholders are not known to raise objections or questions during key corporate actions by corporations, a practice IIAS intends to change. While IIAS will start with institutional investors, it will also extend itself to offer its services to small investors thereafter.

“Shareholders must know the power of their vote. If people can elect governments by voting, it is time small shareholders realised they have the power to decide the fate of key resolutions by companies,” Singhvi says.