Sebi extends timeline to Jan 1 for implementing circular on greivances against proxy advisors

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Sebi on Thursday extended the timeline to January 1, 2021, for implementation of its circular which said that listed companies may approach the markets regulator to resolve grievances against proxy advisors, the Securities and Exchange Board of India (Sebi) said on Tuesday.

The circular issued on August 4 was scheduled to come into effect from September 1 but the regulator on Thursday extended the timeline for its implementation by four months to January 1, 2021.

Proxy advisors provide advice to institutional investors or shareholders of a listed entity in relation to exercise of their rights in the company, including voting recommendation on agenda items.

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The regulator, on August 3, noted that proxy advisors in the past few years have played a key role in enabling shareholders to effectively participate in corporate governance decisions. However, due to the inherent nature of the work, it is probable that proxy advisors and listed entities may have different views on any agenda item of the listed entity leading to grievances.

“In order to facilitate resolution of such grievances of listed entities against Sebi-registered proxy advisors, the listed entities may approach Sebi,” it had said.

The market watchdog had said it will examine the matter for non-compliance by proxy advisors with the provisions of the code of conduct specified under research analyst regulations and the procedural guidelines for proxy advisors.

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The direction came after the capital markets regulator during the day extended the timeline for implementation of procedural guidelines for proxy advisors to January 1.

Sebi had come out with procedural guidelines for such advisors on August 3.

Under the guidelines, they will have to formulate the voting recommendation policies and disclose the updated voting recommendation policies to clients.

The proxy advisory firms must ensure that the policies be reviewed at least once annually.

The voting recommendation policies shall also disclose the circumstances when not to provide such a recommendation.

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