“Role of Proxy Advisers in Corporate Governance”

Foreign institutional investment inflows also are increasing all over the globe in general and India in particular. Corporate governance is essentially concerned with the process by which companies are governed and managed. It is more-or-less a country-specific system. Corporate governance mechanisms are the methods employed to solve governance problems at the firm level. The concept of proxy advisors is an age-old one around the globe. The institutional investors are playing a dominant role in the governance of the companies and vote with millions of shares at general body meetings or postal ballots, e-voting etc. with the support of proxy advisors as they may not have expertise to ensure proper corporate governance. SEBI (Research Analysts) Regulations 2014, issued regulations for proxy advisors. The present article focuses on the role of proxy advisors in corporate governance. Proxy advisors are supposed to be unbiased. Otherwise they may have an adverse affect on resolutions/decisions of the company. The general body meetings are no more formal meetings for compliance under Laws and controlled by few, but directors have to tune themselves in the meetings as per the expectations of proxy advisors who are behind the institutional investors.