A significant shift is occurring in India's corporate landscape as institutional investors are showing less opposition to company resolutions, suggesting improved dialogue between companies and their shareholders. According to recent data, the percentage of resolutions facing institutional dissent has dropped noticeably in the first half of the current fiscal year.
Declining Dissent Signals Improved Engagement
The latest report from Primeinfobase reveals that only 13% of the 12,134 shareholder resolutions disclosed by 1,566 NSE main board listed companies faced opposition from institutional investors during the first half ended September. This marks a substantial decline from the 16% opposition rate recorded during the same period last year.
Pranav Haldea, Managing Director of Prime Database Group, views this trend positively. "The fall in dissent is a positive sign as it indicates that companies are taking a consultative stance and engaging better with shareholders and proxy advisors," he explained. "A higher level of scrutiny has resulted in better quality of resolutions being proposed with a lesser number of them being opposed."
This improvement in corporate-shareholder relations is attributed to multiple factors including enhanced regulations, mandatory e-voting, the implementation of stewardship codes for institutions, and the growing influence of proxy advisory firms.
Board Appointments and Remuneration Remain Flashpoints
Despite the overall reduction in dissent, certain topics continue to generate significant disagreement between companies and their investors. The Primeinfobase report indicates that board appointments and executive remuneration remain the primary areas of contention, mirroring patterns from previous years.
"Board appointments attract more dissent because investors often question the independence of directors," Haldea noted. "Institutional investors rely heavily on proxy advisory firms, which have strict guidelines on what qualifies as independence. If a director has already served a long tenure, for instance, proxy advisors often recommend voting against them, even though the tenure might be still within the regulations."
Compensation issues also continue to spark debates in boardrooms across the country. "Promoter and executive remuneration continues to be a hot topic, both in India and globally," Haldea emphasized. "There have been several instances of promoters paying themselves very high salaries which are not aligned with company performance. Since promoters already hold significant stakes, their incentives are naturally tied to the company's performance and stock price. Thus, investors often question whether they also need sky-high salaries on top of that."
Promoter Power Prevails Despite Opposition
Perhaps the most telling statistic from the report reveals that even when institutional investors strongly oppose resolutions, 98% of them still get approved. Out of the 1,545 resolutions that faced more than 20% opposition from institutional investors, nearly all managed to pass.
This overwhelming approval rate for contested resolutions stems from the concentrated ownership structure prevalent in Indian companies. Primeinfobase data shows that promoters hold 55% of shares in NSE-listed companies, providing them with sufficient voting power to push through resolutions despite opposition from other shareholder categories.
"High promoter shareholding in Indian companies ensures that almost all ordinary resolutions and even special resolutions are passed despite opposition from other shareholders," Haldea observed. He suggested that "increasing the Minimum Public Shareholding (MPS) from the current 25% and making more resolutions special in nature are some of the ways in which this can be improved."
The voting behavior of different investor categories reveals interesting patterns. Retail investors demonstrated limited participation, voting for only about 15% of their shares. Meanwhile, mutual funds have become more active voters since SEBI banned abstentions in 2022, voting in favor of resolutions 88% of the time during the first half of FY26.
Life Insurance Corporation of India, the country's largest institutional investor, supported resolutions in 97% of cases, opposed only 1%, and abstained in 2% of resolutions during the review period. One notable instance of LIC's dissent was its vote against the reappointment of Rajeev Jain as executive director designated as vice chairperson at Bajaj Finance Ltd.
Among the 16,693 resolutions proposed during the six-month period, board changes accounted for the highest number at 5,671, followed by financial results (2,387), secretarial audit (2,072), and board remuneration (1,981). Other categories included auditor appointments, agreements, dividends, key managerial personnel matters, subsidiary actions, and employee stock plans.
The overall picture that emerges is one of gradual improvement in corporate governance practices, with companies becoming more responsive to investor concerns. However, the concentrated ownership structure continues to give promoters decisive voting power, ensuring that most resolutions pass regardless of opposition from other shareholder groups.
