Mumbai, Aug 27 (IANS) The Securities and Exchange Board of India (SEBI) has extended the timeline for implementation of the procedural guidelines for proxy advisors, which will now come into effect on January 1, 2021.
The guidelines, laid down earlier this month, were scheduled to be implemented on September 1.
In a circular on Thursday, the SEBI said that it decided to extend the timeline for compliance with the requirements by four months “after taking into consideration requests received from registered proxy advisors, and the prevailing business and market conditions due to Covid-19 pandemic”.
Proxy advisory firms advise shareholders on corporate governance-related issues and give recommendations regarding voting on resolutions.
As per the procedural guidelines, proxy advisors will formulate the voting recommendation policies and disclose the updated policies to clients.
Proxy advisors will have to ensure that the policies should be reviewed at least once annually. The voting recommendation policies shall also disclose the circumstances when not to provide a voting recommendation, as per the norms.
They would also have to disclose the methodologies and processes followed in the development of their research and corresponding recommendations to its clients, as per the guidelines. The advisors shall alert their clients within 24 hours of receipt of information about any factual errors or material revisions to the report.
The market regulator has also made it mandatory for the proxy advisors to share their report with their clients and the company at the same time, among other requirements.
Sonam Chandwani, Managing Partner at KS Legal & Associates, said that these guidelines require proxy advisors to make available any conflict of interest policies to the public at large.
“This procedural overhaul laying out processes for disclosure management and mitigation of potential conflict of interest resulting from ancillary business activities can be addressed with relative ease,” she said.