Good corporate governance and effective investor stewardship are cornerstones of sustainable corporate success. Institutional investors also have a fiduciary duty to appropriately represent the interests of their investor base (many of whom are small investors) through active engagement with their portfolio companies. In addition, understanding the views of shareholders helps to inform boards of directors in taking decisions to deliver long-term value for the benefit of investors, employees and society.
This paper focuses on effective investor stewardship. It sets out a series of recommendations to progressively develop an Indian Stewardship Code that can be adopted by both public and private mutual funds, insurance companies and foreign investors. The Code will build upon the significant progress in corporate governance and trends in increased investor voting in India to migrate towards a “voting plus” and “comply or explain” framework which is the next step in responsible shareholder engagement. It is believed that this will encourage a constructive and mutually beneficial two-way dialogue between shareholders and the boards of listed Indian companies.