EXERCISE OF VOTING RIGHTS BY THE INVESTMENT MANAGER IN INVESTEE COMPANIES

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 voting decision.

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

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 directors and the chief executive and senior executives, the Investment Manager will consider such factors 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 quality. Employee 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 chief or senior executives linked to the company’s long-term performance, as reflected in enhanced shareholder value. Employee stock-option and stock incentive plans that result in excessive dilution of shareholder value, or are considered to be excessively generous, shall not be supported. Further, any record of unsatisfactory performance or misconduct by personnel who will significantly benefit from approval of such proposals shall be kept in view.

While considering proposals for the appointment/reappointment of statutory auditors, the Investment Manager shall give due consideration to factors such as the auditor’ performance vis-à-vis the company, its overall experience and track record, and any known instances of professional misconduct.

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 significant socio-economic benefits. For this purpose, the Investment Manager shall consider reasonableness of the amount proposed to be spent.

The Investment Manager shall analyze a proposal for merger, or other corporate restructuring, 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 the unitholders and vote against those that are considered to be prejudicial to their interests.

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 forthcoming shareholder meetings and postal ballots or court convened meetings to be held by investee companies 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 Infrastructure Investment 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 Managers) or 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 Income Fund Managers or Managing Director and/or any such person, as authorized by the Managing Director/CIO - Fixed Income.
The Investment Manager may also seek the analysis and recommendations of a research firm or other competent agency or individual to aid such decisions.

d) Where, however, a proposal with respect to equity and equity related investments 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 appointed by him.
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 decision.

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 authorized. The 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 amendment/s 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 investors and 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 reported to 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.