The recent developments regarding institutional participation demand recognition of the efforts made by the market regulator, SEBI. | Photo Credit: utah778
Shareholder voting is essential in corporate governance, enabling shareholders to affect key company decisions, such as approving financial reports, electing board members, and deciding on major issues like mergers and acquisitions. To strengthen corporate governance, shareholders must be engaged, encouraging management to adopt practices that align with shareholder interests. Active participation in the voting process can significantly influence outcomes.
The recent increase in institutional participation is a noteworthy development that can be attributed to initiatives by the Securities and Exchange Board of India (SEBI).
SEBI’s Initiative
SEBI mandated that mutual funds vote on all resolutions beginning April 1, 2022, moving beyond the prior requirement for fund houses to only disclose voting patterns that included abstentions.
Pranav Haldea, Managing Director of Prime Database Group, noted that since abstentions were prohibited, the proportion of votes in favor has dropped from 93% to 88%.
This move is welcome, as mutual funds’ ownership in companies listed on the National Stock Exchange (NSE) has reached a record high of 10.9%. Thanks to robust inflows into systematic investment plans, domestic mutual funds have seen a consistent increase in holdings for nine consecutive quarters. This trend is expected to persist unless foreign portfolio investors (FPIs) significantly re-enter the Indian market.
LIC Voting Patterns
However, the Life Insurance Corporation of India (LIC), holding shares worth approximately ₹15 lakh crore in Indian equities, was absent in two instances during the 2025-26 fiscal year (data compiled by Prime Database until September). LIC voted in favor of 97 out of 100 resolutions, opposed one resolution, and abstained from voting on two instances, constituting 2% of its votes. In previous financial years, there were six instances of abstention, with a notable five resolutions abstained from during the 2022-23 period.
Haldea pointed out that board appointments often garner dissent as investors frequently scrutinize directors’ independence. Institutional investors commonly rely on proxy advisory firms, which tend to have stricter voting guidelines than regulatory standards. Issues surrounding excessive remuneration for promoters and executives remain contentious both in India and abroad.
Among the proposed resolutions, 11,914 were ordinary (71% of the total), while 4,779 were special resolutions (29%). Notably, 41 special resolutions failed, alongside 22 ordinary resolutions, attributed to shareholder activism.
Conversely, retail investor participation in voting remains low, despite retail ownership in NSE-listed companies hitting a 22-year high of 18.75% as of September 30, 2025, surpassing both FPIs and domestic mutual funds.
Concerns Regarding Absenteeism
Such widespread absenteeism is difficult to justify, especially considering the significant improvements made in voting facilities. Depositories now provide fair and transparent e-voting options for all stakeholders, enabling participation from anywhere at any time.
Recent initiatives, including CDSL’s ‘MyEasi’ and NSDL’s ‘Speed-e’ apps, offer expert proxy advisory insights before votes. These platforms aim to democratize shareholder information and enhance access to expert voting guidance from SEBI-registered proxy advisory firms such as IiAs, SES, and InGovern.
Increased participation in annual general meetings (AGMs) would indicate to corporates that they must take shareholder concerns seriously, which could enhance overall corporate governance standards. According to NSE India, 40% of investors are under 30 years old, and the median age of investors has decreased from 38 to 33 over the past five years. There is a pressing need for engagement from Gen Z investors.
Published on November 28, 2025
