Institutions vote against Castrol's proposal to amend AoA

Mumbai: A proposal by Castrol India to amend the articles of association (AoA) for a permanent board representation by virtue of non-retiring directorship was rejected by the public shareholders last week, with the majority of the institutional investors voting against the proposal.

According to the voting results published on BSE, 74.58%, including promoters, voted in favour, while 25.42%, including 82.92% of the institutional investors, voted against the resolution. As this was a special resolution, it requires the approval of shareholders holding at least 75% of the total equity.

The company did not respond to ET's queries.

The company sought approval to alter the articles of association (AoA) with the proposed amendment to Article 128 (4), which states that the directors nominated by Castrol, the promoter, shall not be liable to retire by rotation.

While recommending that shareholders oppose the proposal, Mumbai-based proxy advisory firm Institutional Investor Advisory Services (IiAS) said the companies should ensure that shareholders are empowered to periodically vote on the appointment of all directors. "In principle, IiAS does not approve of any clauses or changes in the AoA which provide special or overriding powers to a particular individual or group, which are susceptible to potential misuse and are prejudicial to the interests of minority shareholders," IiAS said in a report.

IiAS believes that a company's charter documents must ensure that all shareholders can only exercise such a degree of control and influence which is proportionate to their equity ownership.

While promoters held a 51% stake in the company, domestic institutional and foreign portfolio investors owned 16.11% and 10.84% stakes as of September 30, 2022.