Beware, corporate India; shareholders are turning more assertive. Developments at several recent annual general meetings indicate that shareholders — both institutional and retail — are raising their voice quite forcefully — and even borderline aggressively.

Suzlon episode

For instance, at the July 27 AGM of Suzlon Energy, the company had sought shareholders’ approval to, among others, offer, issue and allot equity shares/equity-linked instruments to an extent of ₹2,000 crore and to issue redeemable non-convertible debentures/non-equity linked instruments in one or more tranches up to ₹900 crore on private placement basis for replacement of existing debt.

A majority of the public shareholders voted against these special resolutions.

Among the institutional investors, holders of 65.64 crore shares participated in the vote and, among them, holders of 22.39 crore shares (or 34.093 per cent) voted against the special resolution on the ₹2,000-crore fund-raising plans.

However, the proposal for ₹900-crore fund-raising was welcomed by 97.175 per cent of the institutional investors.

Of the 98.77 crore shares in the category of public non-institutional investors, which include high net worth individuals and retail investors, holders of 92.21 crore shares (or 93.355 per cent) voted against these proposals.

In the absence of 75 per cent votes in favour, these special resolutions failed to pass and as a result forced Suzlon to drop them.

HDFC, IDFC resolutions

Similary, Housing Development Finance Corporation had sought shareholders’ approval for 27 resolutions, including some special ones.

Though most of the resolutions passed with almost 99 per cent approval, the one to seek re-appointment of Deepak Parekh as non-executive director on the board saw 24.856 per cent of votes polled by institutions go against it. Similarly, 21.491 per cent votes from institutional investors were against the re-appointment of Renu Sud Karnad as a director of HDFC. Parekh has been at the helm of HDFC for close to 30 years.

Similarly, IDFC had moved 18 resolutions. One proposal — for payment of commission to non-executive directors — was rejected by 32.713 per cent of institutional investors. A resolution on the re-appointment of Soumyajit Ghosh saw 15.659 per cent institutions voting against it.

What is heartening to see is that both institutions and individual shareholders are increasingly becoming assertive about influencing corporate decision-making. Besides, the voting pattern also suggests that they are not rejecting all the proposals outright or accepting them wholeheartedly. They prefer to vote on proposals on their merits.


However, shareholder participation at the AGM needs to improve. For instance, only about 30 per cent of non-institutional investors and 67.83 per cent of institutional investors participated in the Suzlon AGM.

In HDFC’s case, about 17 per cent of institutional and 56 per cent of non-institutional shareholders were absent at the AGM.

If participation improves at AGMs, it will send a clear signal to corporates that they cannot take matters for granted, and that, in turn, could improve the overall corporate governance standards.