Activist Investors Needed in India to Monitor Local Companies
SEBI Chairman Ajay Tyagi. (Source: BloombergQuint)

Activist Investors Needed in India to Monitor Local Companies

The head of India’s markets regulator urged institutional investors such as mutual funds to be more activist in their dealings with companies they have invested in to protect the interests of minority shareholders.

“Institutional investors can and should act as a counterforce to any unwanted decision being pushed in the board, which may not be in the interest of all stakeholders,” Ajay Tyagi, chairman of the Securities and Exchange Board of India, said Tuesday in an online summit on corporate governance.

The regulator last month made it mandatory for mutual funds to vote in all resolutions of their investee companies from April 2022.

Institutional investors have “stewardship responsibilities” which involve credibly monitoring companies they have invested in, and this is especially important in the Indian context where company ownership is often concentrated and non-institutional investors may lack awareness, according to Tyagi.

Tyagi also flagged growth in ESG investing in India, which has seen assets under management triple in the last one year, and hailed greater representation of women on Indian boards.

There is still “a long way to go,” he said.

©2021 Bloomberg L.P.

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