Proxy Advisory Guidance On Director Appointments – Recent Experiences

A. Background

Proxy advisors often issue voting recommendations in relation to appointment of directors of listed entities, including for appointment of promoter directors and independent directors. The recommendations of proxy advisors may influence the decision making of public shareholders, particularly institutional investors, who are not involved in the management of listed companies. This article sets out a brief summary of the regulatory framework for proxy advisors in India and the recent instances of voting recommendations of proxy advisors in the context of appointment of directors.

B. Regulatory framework on proxy advisors

Securities and Exchange Board of India ("SEBI") regulations define a 'proxy advisor' as 'any person who provide(s) advice, through any means, to institutional investor or shareholder of a company, in relation to exercise of their rights in the company including recommendations on public offer or voting recommendation on agenda items