Institutional Investor Advisory Services India Limited (known colloquially as IiAS) is an Indian proxy firm that provides voting recommendations on shareholder resolutions of Indian listed companies.
IiAS analyses shareholder resolutions to be addressed at AGMs, EGMs, postal ballots and Court Convened Meetings of nearly 300 companies listed on the Bombay Stock Exchange and National Stock Exchange of India, and provides voting recommendations on these resolutions to institutional shareholders. The company was founded in 2010 and commenced operations in 2011.
IiAS has been founded by Anil Singhvi and Amit Tandon. Anil Singhvi is a well-known financial expert in Indian markets and currently runs his own firm, ICAN Investors. Amit Tandon was earlier the CEO of Fitch Ratings in India.
India's proxy advisory industry is relatively nascent – there are three firms, of which IiAS is the largest and the most established.
Board of directors
Anil Singhvi, Founder non-executive director
Deven Sharma
Robert Pavrey
Renuka Ramnath
Amit Tandon, Founder and managing director
Shareholder rights and activism
There is a greater amount of participation by both retail and institutional shareholders in India. In 2014, several resolutions have been defeated by shareholders. In some cases, retail shareholders have taken legal action to stop companies from undertaking transactions.
SEBI regulations
In 2010, the Securities and Exchange Board of India (SEBI), India's market regulator, announced that mutual funds were required to disclose, annually, how they have voted on shareholder resolutions. Some mutual funds took notice and began voting on shareholder resolutions. Others remained passive and continued to abstain from voting.
To prompt resolute voting decisions, in 2014, SEBI asked mutual funds to publish the rationale for their voting decision. Additionally, SEBI shortened the reporting period – mutual funds were required to disclose their voting decisions on a quarterly basis.
E-voting
SEBI has mandated that all listed companies must enable e-voting on all resolutions through the depositories. Earlier, in shareholder meetings, votes were counted by show of hands. This meant that for shareholders to cast their votes, they had to physically attend meetings. So e-voting was introduced in India, which has allowed a dispersed set of investors to voice their opinion. While, e-voting has not materially increased voter turnout as yet, it has started to do so. But, the real implication of e-voting is in the manner in which the votes are counted. E-voting counts one vote per share held, which dramatically changes the counting from the show-of-hands method (of counting one vote per hand).
Changing regulations
SEBI guidelines, and in some instances, the Companies Act 2013, does not allow promoters or controlling shareholders to vote on transactions in which they have an interest: these transactions include all related party transactions (save where the transactions are with wholly owned subsidiaries or between two government entities), mergers and acquisitions with promoter-owned or promoter-controlled entities, and delisting resolutions. The revision in regulation has been brought in to give public shareholders a stronger voice; it enhances the power of public/ minority investor. This has brought on a significant change and has enabled non-promoter shareholders to defeat resolutions.
Concerns raised by IiAS
One of the earliest cases IiAS took up was Akzo Nobel's (BSE: 500710 | NSE: AKZOINDIA | ISIN: INE133A01011) proposal to merge some privately owned companies with itself. Led by IiAS, institutional investors such as ICICI Prudential Life Insurance, Life Insurance Corporation (LIC) and UTI expressed their uneasiness with the deal as the private companies were valued steeply and this would have led to the promoter's stake going up in the listed entity after the merger. Though the company maintained that the deal added value, investors held their ground. Eventually, three days before a court-convened meeting of the shareholders, the company announced a buyback proposal to provide non-promoter shareholders with an exit option.