SEBI's Nascent Guidelines On Proxy Advisors: A Double-Edged Sword?
Yashika Sharma & Nitesh Mahech, University School of Law & Legal Studies,
GGSIPU, New Delhi.
Proxy advisory firms provide research and voting recommendations to help institutional investors vote their shares on issues such as executive compensation and corporate governance. However, there have been several concerns about the proxy advisors on shareholder voting outcomes as it potentially allows advisers to exert pressure on firms to adopt the advisers’ preferred practices, which may not be in the best interests of shareholders. This influence has been recognised as the “éminence grise” of corporate governance.