Business News Desk, This week there was news that an American proxy advisory firm had advised the shareholders of Godfrey Phillips before the AGM and asked them to oppose certain proposals being presented in the AGM. In such a situation, the question arises that what are proxy advisory firms and why do they ask shareholders to oppose any proposal.
First know what the matter is
The dispute between the promoters of Godfrey Phillips is ongoing and amidst this dispute, the company’s AGM is going to be held on 6 September in which voting will take place on several proposals. According to the rules, the company cannot take any decision without the approval of the shareholders, for this it is necessary to get a fixed number of votes. Before this voting, US proxy advisory firm Glass Lewis has advised the shareholders to oppose the proposal to re-appoint Bina Modi as MD. At the same time, the firm has also raised questions on the decision of the company’s nomination committee to reject the proposal to re-appoint Sameer Modi. In the report, shareholders have been warned that the board is not following the principles of corporate governance properly amid the ongoing dispute between the promoters.
What is a proxy advisory company
Proxy advisory firms are advisory firms that issue advice to shareholders during voting on company proposals, which they can use for voting. These firms review the board proposals of the companies in which their clients invest and issue their opinion on it. Apart from this, they also independently review the board proposal of a company. According to Glass Lewis, proxy advisory firms issue advice along with research and data to institutional investors on the proposals issued by the company in annual or special meetings. These proposals can include proposals ranging from mergers to CEO salaries.
These companies put forward the risks associated with any proposal of the company’s board and give a clear picture to the institutional investor about the impact of this proposal, which helps the investor in taking a decision during voting. The investors who seek opinion on the proposal pay these advisory firms for these advices. The work of a proxy advisor can be to advise on voting, bring out important issues, work as a governance expert, advise on ESG issues and influence the board’s decision. For example, if a proxy advisory firm puts forward the risks of a proposal to its client as well as all investors, then there is a possibility that the company may make some changes in that proposal or withdraw the proposal before the meeting. Glass Lewis & Co is also such an advisory firm and it advises on more than 20 thousand proxy voting in 100 countries.
