Sebi extends timeline for proxy advisors’ guidelines compliance to Jan 1

Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday extended the timeline for compliance of procedural guidelines for proxy advisors, that were issued earlier this month, to January 1 from September 1 earlier.

The markets regulator said the timeline was extended after taking into consideration requests received from registered proxy advisors, and the prevailing business and market conditions due to Covid-19 pandemic.

On August 3, Sebi had said proxy advisors should share their report with its clients and the company at the same time. This was the first time the regulator has come out with guidelines for local proxy advisors after framing regulations for them in 2014.

A proxy advisory firm advises institutional investors how to vote on various actions by companies that could impact shareholders.

The timeline to receive comments from the company can be defined by proxy advisors and all comments received from the company should be included as an addendum to the report, the regulator said. This sharing policy should be disclosed by proxy advisors on their website.

If the company has a different viewpoint on the recommendations stated in the report of the proxy advisors, then proxy advisors, after taking into account the said viewpoint, may either revise the recommendation in the addendum report or issue an addendum to the report with its remarks, as considered appropriate, Sebi had said in a circular.

The regulator said proxy advisors should alert clients within 24 hours of receipt of information, about any factual errors or material revisions to the report.

The regulator said proxy advisors should frame voting recommendation policies and disclose them to its clients, and such policies should also disclose the circumstances when not to provide a voting recommendation.

Proxy advisor should also disclose the methodologies and processes followed in the development of their research and corresponding recommendations to its clients, Sebi had said.

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