SEBI has vide its circular dated 5th March, 2021 advised the mutual funds holding shares in listed companies to mandatorily vote in respect of certain resolutions. What action will be taken against those mutual funds not voting on the said resolutions has not been specified but the fund managers/ decision makers have to report on a quarterly basis to their trustees that they voted in the best interest of the unit holders of their schemes. The trustees in turn will have to submit a half yearly report to the SEBI in this regard.
This will be applicable from 1st April, 2021 onwards in respect of the identified list of resolutions. But in respect of all the resolutions, the mutual funds will have to mandatorily vote but after 1st April, 2022 onwards. The identified list of resolutions are :
a) Corporate governance matters, including changes in the state of incorporation. merger and other corporate restructuring, and anti-takeover provisions.
b) Changes to capital structure, including increases and decreases of capital and preferred stock issuances.
c) Stock option plans and other management compensation issues.
d) Social and corporate responsibility issues.
e) Appointment and Removal of Directors.
f) Any other issue that may affect the interest of the shareholders in general and interest of the unit-holders in particular.
ii. Related party transactions of the investee companies (excluding own group companies). For this purpose, “Related Party Transactions” shall have same meaning as assigned to them in clause (zc) of Sub-Regulation (1) of Regulation (2) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.