Proxy Voting
Proxy voting allows a shareholder who cannot personally attend a general meeting to authorise another person (the proxy) to attend and vote on their behalf, a right enshrined under Section 105 of the Companies Act, 2013.
Proxy voting is a fundamental shareholder right that enables participation in corporate decision-making even when physical attendance at a general meeting is not possible. Under Section 105 of the Companies Act, 2013, any member of a company who is entitled to attend and vote at a meeting may appoint another person as their proxy to attend and vote instead. A proxy may or may not be a member of the company.
The appointment of a proxy must be in the prescribed form (Form MGT-11), signed by the member or their duly authorised representative, and deposited with the company at least 48 hours before the commencement of the meeting. A member may appoint more than one proxy if they hold more than one share, but each proxy represents a specific block of shares.
In the context of Indian listed companies, proxy voting has been largely supplemented — and for many practical purposes replaced — by e-voting. SEBI mandates e-voting for all resolutions at general meetings of listed companies, allowing shareholders to vote electronically before the meeting. E-voting platforms operated by NSDL (NEVEN) and CDSL (EVOTING) are widely used. The results of e-voting are then combined with the votes cast at the physical meeting.
Institutional proxy advisory firms such as Institutional Shareholder Services (ISS), Glass Lewis (globally), and Indian firms such as Stakeholders Empowerment Services (SES) and Institutional Investor Advisory Services (IiAS) play an important role in India's proxy voting ecosystem. These firms analyse company resolutions and publish recommendations on how institutional investors should vote, particularly on governance-sensitive matters.
Foreign Portfolio Investors (FPIs), which collectively hold significant stakes in Indian listed companies, increasingly exercise their voting rights through these proxy advisory mechanisms. Growing engagement by institutional investors has contributed to more resolutions being defeated or modified, particularly those relating to excessive executive pay, unfair related party transactions, and weak independent director appointments.