SEBI vide circular No. CIR/CFD/CMD1/168/2019 dated 24th December 2019.
Previously, SEBI has already implemented principles on voting for Mutual Funds, which prescribed detailed mandatory requirements for Mutual Funds in India to disclose their voting policies and actual voting by Mutual Funds on different resolutions of investee companies.
SEBI along with the Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA) had subsequently examined a proposal for introducing stewardship principles in India, which was approved by a sub-committee of the Financial Stability and Development Council (FSDC-SC).
Institutional Investors in capital markets are expected to shoulder greater responsibility towards their clients/beneficiaries by enhancing monitoring and engagement with their investee companies. Such activities are commonly referred to as ‘Stewardship Responsibilities’ of the institutional investors and are intended to protect their client’s (i.e investors in Institutional investors) wealth.
By this circular, It has been decided that all Mutual Funds and all categories of Alternate Investment Funds shall mandatorily follow the Stewardship Code as placed in the circular, in relation to their investments in listed equities.
The Stewardship Code shall come into effect from the Financial Year beginning April 01, 2020.