On August 4, 2020, the Securities and Exchange Board of India (“SEBI”) issued a circular (“Circular”) on the grievance resolution between listed entities and proxy advisors.
Regulation 4(2)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 casts certain obligations on listed entities to protect and facilitate the exercise of the rights of shareholders, including:
The Circular recognises the role of proxy advisors in providing advice to institutional investors/shareholders of a listed entity, in relation to exercise of their rights in the company including voting recommendation on agenda items. However, due to the inherent nature of the work, it is also recognised that proxy advisors and listed entities may have different views on any agenda item of the listed entity leading to grievances.
In order to facilitate resolution of such grievances of listed entities against SEBI registered proxy advisors, the Circular provides that the listed entities may approach SEBI, and SEBI will examine the matter for non-compliance by proxy advisors with the provisions of the Code of Conduct under regulation 24(2) read with regulation 23(1) of the SEBI (Research Analyst) Regulations, 2014 and the procedural guidelines for proxy advisors issued vide SEBI circular no. SEBI/HO/IMD/DF1/CIR/P/2020/147 dated August 3, 2020.
The provisions of the Circular would be applicable with effect from September 1, 2020.
Please find a copy of the Circular dated August 4, 2020 here.
This update has been contributed by Adity Chaudhury (Partner) and Ishita Malhotra (Associate).
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