Mumbai – Institutional investors hold roughly a third of Indian listed equity, and under the Stewardship Code they must vote on every resolution and disclose their reasoning. That obligation has quietly made proxy advisers significant actors in Indian corporate governance.
The Stewardship Code, 2019 requires institutional investors to maintain policies on conflict management, staff training, monitoring investee companies, engagement, collective action with other investors, and voting.
Mandatory voting creates a research problem
A fund holding hundreds of companies must vote on thousands of resolutions each season. No Indian asset manager has the internal capacity to analyse each one independently.
So they buy the analysis. Three domestic proxy advisory firms operate in India: Stakeholders Empowerment Services, InGovern and Institutional Investor Advisory Services. Two global firms also advise on Indian companies.
The consequence is concentration. A handful of research houses shape how a third of the market votes, which gives them influence disproportionate to their size and makes their methodology a governance question in itself.
The regulatory asymmetry
SEBI regulates domestic proxy advisers. It has not extended that framework to foreign firms advising on Indian companies, even though their recommendations move foreign institutional votes.
That gap cuts both ways. Regulation improves accountability and, applied unevenly, can disadvantage domestic firms while leaving the largest influence unregulated.
Where this meets ESG
Proxy advisers increasingly assess board oversight of sustainability and responsiveness to shareholder proposals. Voting records are also the most reliable evidence of whether an ESG fund does anything beyond stock selection, and Indian asset managers must publish them.
Almost nobody reads them, which is why a fund can market itself on governance while voting with management on every contested resolution.
Source: SEBI Stewardship Code, 2019 and proxy adviser regulatory framework, and Indian institutional shareholding data.
