In the case of a very large NBFC in the housing sector, institutional investors, on the advice of Proxy Advisory firms, voted against a fresh term for the Non-Executive Chairman, and would have voted against two other Independent Directors, if they had not withdrawn their candidatures. Was this the case of inadequate communication which could have led to disruptive results?
- The shareholders of a large housing finance company re-appointed their Non-Executive Chairman, with 77.3% of votes being cast in his favour.
- 22.64% of the votes, mostly by FIIs, were cast against his reappointment. This was a special resolution requiring at least 75% of votes in favour of the resolution.
- Proxy Advisory firms had asked investors to vote against this resolution stating that he was a Director on more than 6 Boards, and may have time constraints that could prevent him from discharging his duties effectively. It was also stated that 4 Independent Directors (IDs) on the Board were affiliated to the Company/ had served the Board for over 10 years, reducing the actual independence of the Board to 20%, which was below the acceptable ratio of at least 50%.
- 2 IDs of the same Company, who had to be reappointed in the same AGM, decided to opt out after 2 global Proxy Advisory firms advised investors to vote against their reappointment. The reason given by the Proxy Advisory firms for one of them was his poor attendance in meetings (less than 75%), and for the other, his presence on more than 6 Boards.