About the Author:
Amit Ajay Mutha is currently pursuing LL.B. from Bharati Vidyapeeth New Law College, Pune. He has a commerce background and a strong inclination towards Corporate Laws and Corporate Transactions.


The corporations have various powers vested. They make decisions for the welfare of the company and the profits. The major role in the corporations is also played by the shareholders. The shareholders have a vital role in shaping, investing and other, making companies grow in the corporate sector. The rights that are vested to shareholders were ignored and the powers were also not utilised properly. It has been almost a decade that the concept of Proxy Advisory Firm has emerged in India. This is a new concept and so it may take time to come into action. However, a major change has been seen in the past years in this sector and the adoption of this concept is nearly successful in the country.

At present, the proxy advisory firms work for better corporate governance. The voting rights of the shareholders have an important aspect of taking decisions for the welfare of the company. Welfare also affects the shareholders because they are the ones who invest in those companies. The suggestions to the shareholders are given by the advisory firms and such decisions are based on various agendas related to corporations. The roles that these advisory firms play is very fruitful for the shareholders. There have been many instances in the country where the advisory firms have turned out to be of great support to the stakeholders. This is mainly because they are the knowledgeable bodies that lessen the burdens of the firms and the stakeholders so that they could focus on other work.


The concept of advisory firms emerged in the year 2010. The proxy Advisory Firms are defined in SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014 under Regulation 2(i) (p). The firms after being introduced turned out to be an important part for the shareholders. Shareholders of the companies invest but do not get all the rights. The rights of the shareholders are differentiated on a different basis. The minor and major shareholders were being differentiated and rights were also not being enjoyed by them properly.

IN Govern emerged as India’s first independent advisory firm in India. The firm aims at providing corporate governance research and for exposing the actual reputation of the companies. The firms also look after the appointment of directors of the company and have their own set of rules according to which they function.

The main proxy advisory firms in India are Investor Advisory Service (IiAS), In Govern and Stakeholder Empowerment Services (SES). These firms are important and hold an important position for shareholders in India too. The firms have special knowledge and act as both sources of knowledge and advisor for the investors. They help investors to be aware of their rights. They analyse the whole thing and make the information available to the investors. This saves the time of the shareholders and also saves them from investing in fraud companies and making wise choices for themselves.


The role of an advisory firm is not restricted to a single aspect. The firms play their role in providing proper corporate governance, advising the shareholders, giving them proper assistance, providing information for disinvestment etc. The main work is to provide the shareholders with their rights and have proper knowledge about the firms in which the investors have invested so that they don’t suffer any losses.

The proper governance is the sole task of an advisory firm. Some instances also show that the advisory firms have played their roles successfully. In the year 2015, an advisory firm advised ITC for voting against the ratification of the appointment of DHS as one of the statutory auditors. The advisory firm also provided some valid reasons for doing the same and the same was followed by the firm which turned out to be profitable for them.

The advisory firms follow some guidelines which they form to provide proper governance and this includes the appointment of some of the members for a specified period. This helps in proper governance and decreases the chances of fraud. For example, AKG ADVISORY LLP provides for various services such as help information of companies, legal corporate governance, issues related to investment and all the other corporate advisories that are needed for the smooth functioning.

The corporate governance by these proxy advisory firms has their roles specified but not limited. This means that they are expected to know all the aspects concerning the management of the corporations and their governance. Proxy advisory firms also play a role in policing the boards and keep a track on the governance records of the firms. The stand that was taken by the proxy advisory firms in the issue of Max Promoters turned out to be profitable and useful for all the stakeholders and was in their interest. The issue was related to the merger deal of MX with the HDFC Standard Life.


The increasing importance of the advisory firms in the corporate sector of the country is making the need for its proper regulation an important aspect. The decisions that are being taken by these firms are being taken seriously by the investors and they are acting accordingly. They are now being considered as the regulator of the shareholders and their rights in the market. The ideas that they propose and the research that they provide are being considered as final and binding. In such cases, it is important to regulate advisory firms properly.

The basic necessity is to solve the problems that are arising due to advisory firms. The conflicts that arise due to the difference in the opinions of the advisory firms and the shareholders. The Securities and Exchange Board of India issues two circulars. One was on August 3, 2020, for [providing “Procedural Guidelines to Proxy Advisors” and one on August 4, 2020, that provides for “Grievance Resolution between listed entities and proxy Advisors”.

The main purpose to pass these regulations was to solve the ongoing conflicts in the corporate sector. The Report that was passed in the year 2019 related to issues concerning Proxy Advisors had received some of the criticism from the public and so the new reports have been passed in the year 2020. The recent report throws light on issues such as conflicts of interest, issues related to voting, and the redressal system of grievance.

After 2014, this was for the first time that any regulations have been passed for regulating the proxy advisory firms. This shows that there existed a need for the regulation of these advisory firms. Such regulations are important to bring transparency, smooth and proper working of the advisory firms. This is important because the shareholders solely depend on the decisions of these firms. This will bring a positive change in the working of such firms and there will be more facilities too.


The proxy advisory firms are the system of western culture and have been adapted in India a decade ago. It takes time to regulate and make the functioning of such large-scale firms proper. The firms have been working to solve the issues for the shareholders and making them avail their rights. The growth of these firms has been very rapid in the country and had taken place as the backbone of the shareholders, especially.

The regulation of these firms became important because along with the time many issues arose. These issues were mainly related to the transparency of the firms. This is because the shareholders completely started following the tips and tricks of the advisory firms. This might have led to unwanted and unexpected losses to the shareholders too. The regulations that have been issued by SEBI will bring positive changes in the working of the firms.

The regulations were long-awaited as after 2104, no regulations were made to the firms and it’s important to bring changes along with the time. The changes are important for firms and shareholders. This is a positive note that the much-needed regulations have been issued and more changes will be done to it according to the needs and issues that will arise in future.