Abstract
Proxy advisory firms (PAFs) play a vital role in guiding investors on voting decisions and strengthening corporate governance. In India, they are legally recognised under SEBI (Research Analysts) regulations, 2014, with additional norms issued in 2020 to ensure transparency and conflict free advice. While they enhance shareholders activism and accountability, PAFs face challenges such as corporate resistance, conflict of interest, and limited investor awareness. This paper highlights their Role, legal recognition, advantages and obstacles they encounter in India.
INTRODUCTION:
Corporate governance is a process of the company to make a smooth flow in the governess of the company and it helps to protect the interest of the shareholders and its compose the relationship between the management, board of directors and shareholders, Then It’s ensures to maintain accountability and full transferability .it also helps to make a long term trust and good faith among the investors .so it helps to social and economic growth of the company. In India Proxy advisory firms grew after such corporate governance failures like Satyam scandal (2009), which highlighted stronger need of shareholders awareness, and created a pathway for a formation of proxy advisory firms. Then only the PAFs are formed in India. The PAFs are also recognized in SEBI under the research analyst regulation, 2014. The proxy advisory firm is a separate legal entity and it’s registered under the companies Act, 2013 but it’s regulated and registered by the SEBI.
The PAFs help the investor and shareholders in their voting rights as recommendation and manage the conflict of interest with the proper backed research. So, the proxy advisory firm acts as an intermediary for the company and the shareholders and they help the minority shareholders and investors in their right to vote, proxy voting, right to collect dividend and transferability of shares. The proxy advisory firm is expected to have significant growth in future as corporate governance become more globalized. PAFs push companies to adopt the higher ESG (Environmental, social and governance) standards. PAFs will play a key role in ensuring that businesses are not only profitable but also responsible and sustainable in future. In this research paper we are going to see about the PAFs role, legal recognition and the obstacles they faced in the Indian market.