Mandatory e-voting by MCA since June gives shareholders upper hand.

MUMBAI: Last week's surprise defeat of Tata Motors' resolutions to ratify the salary of three top executives — triggered by greater participation by institutional and individual shareholders through e-voting — is an alarm bell for many companies that will soon need to take shareholder approval for key decisions. Nearly 64 per cent of institutional investors in Tata MotorsBSE -0.85 % and 41 per cent of its public shareholders voted against the resolution to ratify salaries of the three executives- triggered by greater participation by institutional and individual shareholders through e-voting — is an alarm bell for many companies that will soon need to take shareholder approval for key decisions. Nearly 64 per cent of institutional investors in Tata Motors and 41 per cent of its public shareholders voted against the resolution to ratify salaries of the three executives. 

Such large participation by institutional and public shareholders is rare in the Indian corporate scene as few shareholders turn up at annual general meetings where such proposals were usually put to vote. But since June, electronic voting has been made mandatory by the Ministry of Corporate Affairs ( MCA). This will now facilitate greater participation by public and institutional shareholders, possibly putting many companies on a weak wicket.

 Any special resolution that needs approval of 75 per cent of shareholders present — related party transactions, increase in borrowing limits, issue of shares, salaries exceeding 5 per cent of a company's net profit — will now be put through a litmus test, thanks to e-voting.