Minority shareholders in India have rejected a number of resolutions put forth by companies including Tata Motors, part of the Tata conglomerate,
the
Financial Times
reported.
This shareholder activism is “virtually unprecedented in Indian corporate history,” the article said.
“Minority shareholders are taking advantage of new capital market rules to defend their financial interests,” the article said.
In July, shareholders of Tata Motors, which reported a net loss for the year, rejected a compensation package for directors, the
FT
article said.
The
FT
report also noted: “For decades, Indian business families have treated their stock market-listed companies as personal fiefdoms, with little regard for corporate governance, or fair treatment of minority shareholders.”
India's new Companies Act, which took effect April 1, requires all related-party transactions to be approved by up to 75% of minority shareholders. India's cabinet recently approved amendments to the act that reduce the threshold from 75% to 51%, the article said.
“Another amendment says related-party transactions with 100 per cent subsidiaries of listed companies need not be put to a vote of minority shareholders, a loophole that will leave controlling shareholders manoeuvring room,” the
FT
report said. (Source:
Financial Times
, Dec. 5, 2014.)
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