EXERCISE OF VOTING RIGHTS BY THE INVESTMENT MANAGER IN INVESTEE COMPANIES
ICICI Prudential Asset Management Company Ltd. (“the AMC” or “the Investment Manager”)
acts as the Investment Manager to the schemes of ICICI Prudential Mutual Fund (“the Fund”).
Some of the schemes of the Fund have invested or will be investing in securities of
or units of Infrastructure Investment Trusts (InvITs) (“investee companies”) carrying
rights or debt instruments. These securities carry (or will carry) voting rights that can
exercised at meetings of shareholders or court convened meetings or through postal ballots.
The AMC, as the Investment Manager, is authorized to exercise, or to abstain from
the rights on behalf of the unitholders of the investor schemes.
This note sets out the general policy to be followed by the AMC in deciding on whether and
how to exercise the voting rights vested in it as the Investment Manager. The policy takes
account the relevant regulatory guidelines issued by the Securities and Exchange Board of
II. Guiding principle
The basic principle that should guide the policy on dealing with voting rights in
companies is that the exercise of voting rights or abstention from such exercise should be
in the perceived best interests of the unitholders of the investor schemes. In the event of
conflicts of interest between those of the Investment Manager and the unitholders, the
III. Proposals coming up for voting
Matters that generally come up for voting by shareholders of investee companies and
of debt instruments (either at shareholder meetings or at court convened meetings or
postal ballots) include but are not limited to the following:
• change in the fundamental objectives of the company and in its character or name;
• change in the capital structure, including increase and decrease of capital, and
of shares and convertible securities;
• appointment, remuneration, retirement and removal of directors, remuneration of
chief executive officer and other executive directors, and the issue of stock
directors and executives;
• other corporate governance issues;
• appointment and remuneration of statutory auditors;
• any scheme of arrangement, merger and other corporate restructuring and anti-
• social and corporate responsibility issues; and
• any other matters that may affect the interests of the shareholders/holders of
IV. General guidelines for exercise of voting rights
The Investment Manager’s decision either to vote, or to abstain from voting, on
proposals before the shareholders of investee companies shall be made taking into account
the possible implications of the voting or abstention on the interests of the unitholders
represented by the Investment Manager. The Investment Manager should ensure that the voting
or abstention would help protect, preserve, or enhance the unitholders’ value in the
investee company, or would not prejudice their interests.
Further, the Investment Manager may decide to abstain from voting:
• where the proposal is not considered detrimental to the interests of the
• where the cost involved in exercising the voting rights far outweigh the
advantages to be
• where the investments are below a specified minimum value in an investee company,
determined by the Investment Manager.
• where the investments in the investee company were made by index schemes
orexchange traded funds or arbitrage schemes / positions of the Fund.
a. Changes to the Memorandum and Articles of Association
The reasons for the proposed change (especially of the objects clause) and its
likely impact on the investee company’s character, business operations and
financial condition shall be taken into consideration while determining the
b. Changes to the capital structure
Proposals to increase the capital, whether through a rights issue or other
means, should be examined to see why it is needed, and if it would have a
significant impact on the existing shareholders’ rights and their existing or
potential value. It should also be examined how the additional capital infusion
would be leveraged
c. Board of Directors
The board of directors of a company shoulders the primary responsibility for
managing it in such a manner as would protect or enhance shareholder value
while also ensuring that the company complies with statutory and regulatory
requirements and adopts good corporate governance practices. The board should,
therefore, comprise individuals who can be expected to help the board perform
its role satisfactorily.
While considering a proposal for appointment or reappointment of a director of
an investee company, the Investment Manager shall take into account such
factors as the person’s qualifications and relevant experience, any instances
of his misconduct as would reflect onhis ability to function effectively as a
director, any history of legal proceedings against him, and (in the case of an
independent director) the degree of independence that he could beexpected to
bring to his tasks. The Investment Manager shall normally not vote against
suchproposals unless there are strong factors in the knowledge of the
Investment Manager thatmilitate against the appointment or reappointment.
While considering proposals for remuneration (including any stock options) of
the chief executive and senior executives, the Investment Manager will consider
as the company’s business volume, income, and profits, statutory or regulatory
limits, and comparable industry practices. It is clearly in the interests of
shareholders that an investee
company should have the ability to attract and retain personnel of high
remuneration levels should reflect market-based judgment taking into account
the nature, size
and complexity of the business of individual companies and industry practices.
The Investment Manager would normally support proposals for remuneration of the
senior executives linked to the company’s long-term performance, as reflected
shareholder value. Employee stock-option and stock incentive plans that result
dilution of shareholder value, or are considered to be excessively generous,
shall not be
supported. Further, any record of unsatisfactory performance or misconduct by
who will significantly benefit from approval of such proposals shall be kept in
e. Appointment of statutory auditors
While considering proposals for the appointment/reappointment of statutory
Investment Manager shall give due consideration to factors such as the auditor’
vis-à-vis the company, its overall experience and track record, and any known
f. Corporate social responsibility
The Investment Manager shall normally support, or will not vote against,
proposals that would
enable the company to contribute to social development, community welfare, and
environmental protection, or those that are reasonably expected to bring in
benefits. For this
purpose, the Investment
Manager shall consider reasonableness
to be spent.
g. Mergers and corporate restructuring
The Investment Manager shall analyze a proposal for merger, or other corporate
to assess its short- and long-term financial and strategic implications for the
company and its
shareholders, and support those that are considered to be in the interests of
and vote against those that are considered to be prejudicial to their
V. Conflicts of interest
Situations involving current or potential conflicts of interest may only arise when a
is from an investee company within the ICICI/Prudential group. In all such situations,
shall be taken in the interest of the unitholders of the investor scheme.
VI. Procedure for policy implementation
The general procedure to be adopted by the Investment Manager for considering, and
deciding on, proposals from investee companies is noted below:
a) The Investment Manager shall arrange for the Custodian or such other
agency appointed for the purpose, to notify the Investment Manager, in advance, of
meetings and postal ballots or court convened meetings to be held by
and the proposals coming up for voting at the meetings or for ballot.
b) On being so notified, the proposals will be reviewed by the Investment
Manager in terms
of the guidelines contained in this policy.
c) A decision to vote for or against, or to abstain from voting, shall be
taken on each proposal.
With respect to equity and equity related investments, including
Trusts (InvITs), the final decision on each proposal shall be taken by
either Head of
Research or Chief Investment Officer (CIO) or Deputy CIO (including Fund
Managing Director and/or any such person, as authorized by the Managing
Director/CIO.With respect to fixed income investments, the final decision
on each proposal shall be
taken by either Chief Investment Officer (CIO) – Fixed Income or any Fixed
Managers or Managing Director and/or any such person, as authorized by the
Director/CIO - Fixed Income.
The Investment Manager may also seek the analysis and recommendations of a
firm or other competent agency or individual to aid such decisions.
d) Where, however, a proposal with respect to equity and equity related
involves conflicts of interest or where the Head of Research intends to
vote against a
proposal, the proposal shall be referred to, and a decision thereon shall
be taken by the
committee chaired by the Managing Director or along with other members
Further, where, a proposal with respect to fixed income investments
involves conflicts of
interest or where the CIO – Fixed Income intends to vote against a
proposal, the proposal
shall be referred to, and a decision thereon shall be taken by the
committee chaired by the
Managing Director or along with other members appointed by him.
This would ensure that the Investment Manager’s decision on the proposal
would be in
the best interests of the unitholders of the investor scheme concerned.
Further, there shall
be a written disclosure of the conflicts of interest in the process leading
to the final
e) Further, the decisions taken on each proposal along with the facts of
the proposal and
justification shall be recorded and documented.
f) Where so decided, the voting right shall be exercised, in accordance
with the decision
taken on the proposal, by a representative of the Investment Manager so
Investment Manager could avail of the services of an agency for
representing the Fund/
the Schemes, in the meetings of the Investee companies.
g) The AMC shall obtain certification from “scrutinizer” in terms of Rule
20 (3) (ix) of
Companies (Management and Administration) Rules, 2014 and any future
to the said Rules thereof on the voting reports disclosed. Such
certification shall be
submitted to the Board of Directors of the Trustee Company and also
disclosed in the
annual report and on the AMC’s website.
h) The Board of Directors of the AMC and the Trustee Company shall review
and ensure that
the AMC has voted on important decisions that may affect the interests of
the rationale recorded for vote decision is prudent and adequate. The
confirmation on the
above, along with any adverse comments made by the Scrutinizer, shall be
SEBI in half-yearly Trustee reports.
i) A periodical report containing a summary of the voting decisions
exercised and abstained along with the rationale, as the case may be, will be submitted to the
Board of Directors of the Trustee Company and the AMC.
With respect to investments in companies who hold investments in Schemes of the Fund,
the Investment Manager will follow the same principles as detailed in this policy document
and shall act in the interest of unit holders.
The following periodical disclosures shall be made available on the aforesaid website and/or in the abridged annual report for the year distributed to the unitholders:
a) Voting exercised and abstained along with the rationale on a quarterly basis within
10 (ten) working days from the end of the quarter in the format prescribed by SEBI, as
amended from time to time. Additionally, a summary of the voting exercised across all
the investee companies and its break-up in terms of total number of votes cast in
favour,against or abstained from shall also be updated.
b) Voting exercised and abstained along with the rationale on an annual basis in the
prescribed by SEBI, as amended from time to time.
c) Certification from the Scrutinizer on the AMC’s voting reports.
VIII. Review/Amendments to the policy
This policy shall be reviewed once in two years, or as and when needed. This Policy may
only be amended with the prior approval of the Board of Directors of the Trustee Company.
a) SEBI circular no. SEBI/IMD/CIR No 18/198647/2010 dated March 15,
b) Mail dated May 9, 2011 from SEBI; and
c) Mail dated June 23, 2011 from SEBI
d) SEBI circular no. CIR/IMD/DF/05/2014 dated March 24, 2014.
e) SEBI circular no. SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10,