The Securities Exchange Board of India (SEBI) has issued guidelines for votes cast my Mutual Funds in order to further improve transparency as well as to encourage Mutual Funds/AMCs to diligently exercise their voting rights.
As per the new additional guidelines prescribed following best interest of the unitholders and based on the deliberations in MFAC, Mutual Funds including their passive investment schemes like Index Funds, Exchange Traded Funds etc. shall be required to cast votes compulsorily in respect of various resolutions in matters including, Corporate governance matters, including changes in the state of incorporation. merger and other corporate restructuring, and anti-takeover provisions, Changes to capital structure, including increases and decreases of capital and preferred stock issuances. Fund Managers/Decision makers will also be required to submit a declaration on 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 unit holders. Furthermore, Trustees in their Half Yearly Trustee Report to SEBI, will have to confirm the same.
Mutual Funds having no economic interest on the day of voting are also exempted from compulsorily casting of votes.
This circular will be applicable from April 01, 2021 except some guideline as Mutual Funds will compulsorily be required to cast their votes with effect from April 01, 2022.
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