Reimagining proxy advisory in India: An investor relations playbook

Understanding the proxy ecosystem: Domestic and global actors

India’s proxy advisory landscape includes both domestic and global proxy firms influencing shareholder decisions. Domestic firms wield influence over mutual funds and Asset Management Companies (AMCs) and publish frameworks on resolutions including executive pay, share-based plans, related-party transactions and other governance issues. Their recommendations are based on stated policies and case-specific analysis, which means even proposals that comply with regulations may face negative ratings if disclosures or rationales are weak. Global firms play a complementary but distinct role by guiding foreign institutional investors, particularly passive and ESG-focused funds. They apply international benchmarks on remuneration, dilution, and with their 2025 updates, expanded expectations on board oversight of AI and responsiveness to shareholder proposals. 

As global and domestic standards increasingly converge, companies must align with both to sustain investor confidence.

Why proxy advisors matter for IR: The expanding influence of advisory firms

Two structural shifts have amplified the power of proxy recommendations. Domestic Institutional Investors (DIIs) and Foreign Institutional Investors (FIIs) now hold roughly a third of India’s listed equity and, under the Stewardship Code, must vote on every resolution and disclose their reasoning. At the same time, retail participation has surged, with millions of investors accessing proxy recommendations before e-voting.

A single negative recommendation can swing institutional sentiment or invite foreign investor activism. Proxy advisors emphasize fairness, transparency and minority protection, often going beyond compliance to assess intent and governance maturity. For IR professionals, they represent more than gatekeepers; they are partners in shaping how purpose and strategy are perceived in the market.

Beyond compliance: A strategic lens

Proxy advisory should not be treated as a last-minute compliance hurdle but as a forum for demonstrating governance excellence. Investor relations (IR) leaders need to drive an ongoing, data-driven dialogue with shareholders, framing governance, strategy and performance as parts of a single story.

Key challenges for IR teams

• Misalignment between disclosure and investor expectations: Meeting SEBI or Companies Act norms is no longer enough. Proxy advisors benchmark proposals against global standards and strategic rationale. A compliant remuneration plan may still face rejection if metrics are unclear or dilution is excessive.
• Fragmented communication: Generic disclosures fail to resonate across investor types. Domestic funds scrutinize dilution and governance; foreign institutions emphasize ESG and board independence; retail shareholders value clarity. Lack of tailored messaging will create misalignment with each audience.
• Timing and responsiveness: Proxy reports are often released days before voting deadlines. Without prepared responses, companies risk losing control of the narrative.
• Reputational risks: Even approved resolutions can leave reputational scars if advisory commentary is negative. Lack of proactive engagement and fact-based communication can affect credibility and long-term trust.

An investor‑relations playbook

• Map your shareholder and proxy landscape: Identify your ownership mix from domestic institutions, FIIs, retail and family offices. Determine which proxy firms influence each segment and analyze past voting trends to tailor engagement.
• Benchmark resolutions and craft the narrative: Review resolutions at least two months ahead to ensure alignment with proxy guidelines and peer precedents. Link every proposal to strategic outcomes and long-term value.
• Engage early and often: Initiate dialogue four to six weeks before the AGM. Where permissible, share draft disclosures and seek informal feedback. Such pre-emptive conversations help address concerns before formal recommendations are issued. Hosting thematic investor sessions on topics like sustainability or AI oversight , positions the company as forward-looking.
• Respond swiftly during the voting window: Once proxy reports are out, summarize recommendations internally and respond quickly. Reinforce positive feedback with undecided investors; issue clarifications or data-backed addenda for critical assessments. Mobilize leadership and independent directors for targeted investor outreach.
• Analyze outcomes and refine strategies: Post-meeting analysis of vote patterns and feedback reveals alignment gaps. Use insights to recalibrate disclosure, governance and investor communication frameworks.

Raising the bar on governance

IR leaders have a unique opportunity to shape India’s governance culture. By treating proxy advisory as a strategic extension of stakeholder engagement, companies can move beyond compliance to set new disclosure standards. Proactive transparency on emerging themes such as AI ethics, climate transition, board diversity, can build investor confidence and position the company as a governance innovator.

Conclusion: Leading the conversation

India’s proxy advisory ecosystem is evolving rapidly, making Investor Relations central to effective governance. Companies that view proxy advisors as strategic partners rather than critics, can transform voting exercises into opportunities to strengthen reputation and trust. Data-driven proxy management, early engagement and stronger disclosure are no longer optional - they define how the market values stewardship and long-term performance.

The article is also contributed by Kasturi Kannan Sharma / Nikita Atri.