Proxy Advisers (PAs) are required to maintain records of their voting recommendations and furnish them to SEBI on request. This ensures that SEBI can review PA activities and compliance. This article provides a comprehensive technical analysis of this requirement.
Regulatory Basis
Primary Provision: Regulation 23(3)
Regulation 23(3) provides that:
"Proxy adviser shall maintain the record of his voting recommendations and furnish the same to the Board on request."
Record of Voting Recommendations
What Must Be Maintained
1. Voting Recommendations
- All voting recommendations made
- Date of recommendation
- Company name
- Agenda item
- Recommendation (For/Against/Abstain)
- Rationale
2. Supporting Information
- Research conducted
- Analysis performed
- Rationale for recommendation
- Any changes or revisions
3. Communication Records
- Reports shared with clients
- Reports shared with companies
- Addendums issued
- Communications with clients
Record Keeping Format
Electronic or Physical
Records may be maintained in electronic or physical form.
Key Elements
| Element | Description |
|---|---|
| Date | Date of the recommendation |
| Company | Subject company name |
| Agenda Item | The agenda item being voted on |
| Recommendation | For, Against, or Abstain |
| Rationale | Basis for the recommendation |
| Supporting Documents | Research and analysis |
| Communication | Reports and addendums |
Furnishing to SEBI
When to Furnish
- On request from SEBI
- As part of inspection
- As required by SEBI
What to Furnish
- All records of voting recommendations
- Supporting documents
- Communication records
Timeline
- As specified by SEBI
- Promptly upon request
Retention Period
Five Years
Records must be maintained for a minimum period of five years.
Sample Record
"Voting Recommendation Record
| Date | Company | Agenda Item | Recommendation | Rationale |
|---|---|---|---|---|
| 01/06/2025 | ABC Ltd | Election of Directors | For | Strong governance |
| 15/06/2025 | XYZ Ltd | Related Party Transaction | Against | Concerns about terms |
| 20/06/2025 | DEF Ltd | Dividend Declaration | For | Adequate reserves |
Supporting documents and communications are attached."
Common Compliance Gaps
1. Not Maintaining Records
Some PAs do not maintain records of voting recommendations.
Solution: Maintain comprehensive records.
2. Incomplete Records
Some PAs maintain incomplete records.
Solution: Ensure all elements are recorded.
3. Not Furnishing to SEBI
Some PAs do not furnish records to SEBI on request.
Solution: Furnish records promptly.
4. Not Retaining for Five Years
Some PAs do not retain records for five years.
Solution: Retain records for five years.
Consequences of Non-Compliance
1. Regulatory Action
SEBI may take action for non-compliance.
2. Monetary Penalties
SEBI may impose monetary penalties.
3. Suspension or Cancellation
SEBI may suspend or cancel registration.
Conclusion and How Anuj Desai & Associates Can Help
Record maintenance is a critical compliance requirement for PAs.
Anuj Desai & Associates offers specialized services to help PAs comply with record keeping requirements:
- Record keeping system setup
- Record maintenance support
- SEBI request handling
- Compliance audit and advisory
Contact us today to ensure your voting recommendation records comply with SEBI requirements. Our team will guide you through the process.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified professionals for legal and compliance matters. Anuj Desai & Associates is a SEBI compliance consulting firm based in India.