The Securities and Exchange Board of India vide its notification dated 5th March 2021has issued guidelines on votes cast by mutual funds to further improve transparency and encourage such fund houses to diligently exercise their voting rights in best interest of the unitholders and the guidelines will be applicable with effect from 1st April 2021.
Mutual Funds including their passive investment schemes like Index Funds, Exchange Traded Funds etc. shall be required to cast votes Compulsorily in respect of Corporate governance matters, including changes in the state of incorporation merger and other corporate restructuring, and anti-takeover provisions and Any other issue that may affect the interest of the shareholders in general and interest of the unit-holders in particular.
In case of the mutual funds having no economic interest on the day of voting, it may be exempted from compulsorily casting of votes and all remaining resolutions which are not covered in this circular, shall also compulsorily be required to cast their votes with effect from April 01, 2022.
Fund managers need to submit a declaration on a quarterly basis to the trustees that the votes cast by them have not been influenced by any factor other than the best interest of the unitholders.
