Shareholder Dissent At Nykaa, Burger King And Sun TV

Three companies in different industries and of different vintage have a shared problem: displeased investors.

The most recent case is of FSN E-Commerce Ventures Ltd., the owner of popular beauty and fashion e-commerce platform Nykaa. FSN E-Commerce Ventures, which listed in late 2021, sought to amend its articles of association. The amendments entrench the promoter powers regarding chairman and board appointments. 80% of the institutional votes cast were against the proposal, yet it passed due to promoter and private equity investor support.

A significant number of institutional investor votes were also cast against the Nykaa parent's employee stock option proposal, but these too did not amount to enough for a rejection.

FSN E-Commerce Ventures Ltd. (Nykaa)

• Promoter: 52.55%

• Public: 47.44%

  - Institution: 9.15%

  - Non Institution: 38.28%

This is similar to another unicorn, Zomato, where institutional investors had vetoed ESOP resolutions proposed in a September 2021 postal ballot, said Amit Tandon of proxy advisory firm Institutional Investor Advisory Services. The relatively low institutional holdings in both instances (Zomato and FSN), ensured that the resolutions were carried, he added.

"This speaks of the disconnect between private equity investors and market investors. The sooner unicorns and start-ups are able to bridge this gap, the easier it will be for them and better for our markets," said Tandon.

At Burger India Ltd., the opposition came from non-institutional public shareholders when over 93% of the votes cast were against three resolutions seeking to ratify and amend articles of association. The amendments related to promoter rights to appoint directors to the board and committees as also to appoint a board observer.

Though public non-institutional shareholders hold a fourth of the company's shares, their opposition votes were not enough for the resolutions to be rejected.

Burger King India Ltd.

• Promoter: 52.55%

• Public: 47.45%

  - Institution: 21.76%

  - Non Institution: 25.68%

At Sun TV Network Ltd., an old issue reared its head again: the remuneration of top leadership. Over 86% of the institutional votes cast were against the two resolutions to reappoint Kalanithi Maran as executive chairperson and Kaveri Maran as executive director and approve their remuneration.

More institutional investors voted in this meeting (72.96%) than in the April 2019 meeting (56.31%) when a resolution for compensation was last brought up, said Tandon. And more voted against this time (86.24%) than the last time (56.31%), he pointed out.

"Combine this with the conference call recording from last year, when the company had decided to cut back dividend, and you have the picture of a company that is steadily losing investor confidence."

Sun TV Network Ltd.

• Promoter: 74.99%

• Public: 25.01%

  - Institution: 13.02%

  - Non-Institution: 11.98%

All shareholding data in the story is based on company filings regarding ballot outcomes.