India’s securities market regulator has been advised to set up a UK-style stewardship code by its international advisory board.
The International Advisory Board of the Securities and Exchange Board of India (SEBI) made the recommendation after discussing the participation of institutional investors in the governance of investees at its last meeting.
The panel includes well-known international figures such as Jane Diplock and Russell Loubser. Diplock, currently a director of Singapore Exchange Ltd., is a former chairman of the Executive Committee of the International Organization of Securities Commissions (IOSCO) and the New Zealand Securities Commission who currently sits on the board of the International Integrated Reporting Committee.
Loubser is the ex-CEO of the Johannesburg Stock Exchange, who has chaired the Working Committee of World Federation of Exchanges and was a member ofthe groundbreaking King Commission on Corporate Governance in South Africa.
Other members of the advisory panel include the likes of Blair Pickerell, the former CEO of Morgan Stanley Investment Management who currently chairs Nikko Asset Management in Asia.
SEBI set up the IAB in 2011 to learn from global market trends. At its last meeting, board members observed that the participation of funds in voting doubled over two years, after SEBI mandated disclosure of the rationale supporting their voting decisions on a quarterly basis. Voting participation rose from 48.5% in 2013 to 83.1% in 2015.
Based on this, the advisory board recommends that SEBI, in coordination with other authorities introduce a stewardship code similar to that in the UK, based on the approach of ‘comply or explain’.
If adopted by SEBI, India would be the third country in Asia to implement a stewardship code, after Malaysia and Japan. Link