Rising Shareholder Activism Keeping Promoters On The Hook

Shareholder activism has been gaining currency and managements have to think twice before proposing resolutions to be approved and voted by shareholders. SEBI is also ensuring that it becomes difficult for promoters to push anything just because of their majority stake. For every negative vote, you now need three positive votes to approve the resolution. In some cases, the promoter is not allowed to vote and the minority shareholders decide the outcome. Readers would recall that Eicher Motor shareholders rejected a pay hike to Sidharth Lal, its MD & CEO. Similarly, IDFC shareholders rejected the reappointment of Vinod Rai as independent director. In the case of Zee Entertainment, two directors stepped down on the eve of the AGM as proxy advisors had asked the shareholders to vote them out. Meanwhile, the company which announced a non-binding agreement sale to Sony Entertainment has been directed by NCLT Mumbai bench to consider shareholder Invesco’s request for EGM to oust MD Punit Goenka. Jindal Steel & Power wants its shareholders to approve payment of one-time remuneration to its four independent directors. Proxy holders are advising shareholders to oppose the same as it violates terms of an independent director. Further an investor has rejected the reappointment of Shallu Jindal, wife of Naveen Jindal and a director on the board of the company for nine years. Indeed, it is a tough time for promoters.