CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Governance Influencers
Vindhya Life Insurance Ltd. holds shares worth a significant stake in Arya Steels Ltd. A resolution at Arya's meeting is a related party transaction involving the promoters. In the context of stewardship duties of an institutional investor, which action is most appropriate for Vindhya?
Vindhya should assess the resolution under its stewardship and voting policy, vote in the interest of its policyholders, and record the reasons for its vote. Blanket abstention or giving the vote to promoters would defeat the purpose of institutional stewardship.
- AAbstain automatically on every resolution to avoid conflict
- BAssign its vote to the promoters
- CVote after evaluating the resolution against its voting policy, and record reasons for its voteCorrect
- DSell shares only after the meeting without any voting
Explanation
Institutional investors are expected to apply a board-approved voting policy, vote in the interest of their beneficiaries and document reasons. Blanket abstention or handing the vote to promoters defeats stewardship.
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