SEBI issues Procedural Guidelines for Proxy Advisors


The Securities and Exchange Board of India on 3rd August 2020 has issued a set of procedural guidelines for proxy advisors and has mandated the proxy advisors to abide by code of conduct as specified herein.

The Proxy Advisors shall formulate the voting recommendation policies and disclose the updated  voting recommendation policies to its clients and The proxy advisors must ensure that the policies should be reviewed at least once annually and they shall disclose the methodologies and processes used for development of their research and corresponding recommendations to its clients.

SEBI has also directed proxy advisors to alert their clients, within 24 hours of receipt of information, about any factual errors or material revisions to the report. The voting recommendation policies shall also disclose the circumstances when not to provide a voting recommendation.

Further, the Proxy advisors shall clearly disclose in their recommendations the legal requirement vis-a-vis higher standard they are suggesting if any, and the rationale behind the recommendation of higher standards.

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