Do not outsource the vote to the proxy companies: HDFC Parekh

MUMBAI: HDFC President Deepak Parekh He has told investors that the company's executive directors (DE) must hold positions on the board of the group's firms to protect the interests of the major housing finance companies as a holding company. He also warned shareholders against outsourcing their voting decisions to proxy advisers and said management was available to share business plans.

Parekh's comments come before the annual general meeting of the corporation next month. In the past year AGM More than 22% of the voters followed the advice of the representative advisers and opposed the new designation of Parekh, claiming that it was overvalued or that it was present in too many meetings.

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In the letter to shareholders, Parekh said, I believe it is important to articulate the role of HDFC 's executive directors in the context of their directorships in HDFC group companies. The objective of having these directorships is to protect the interests of HDFC 's shareholders. HDFC is the parent company and has investments in its subsidiary and associate companies. Taking care of our strategic investments is a core function at HDFC, Parekh said.

I have said that HDFC management was accessible to discuss HDFC's performance and for articulating long-term strategic plans. We have gradually refreshed our board with independent directors who bring to the table core skills and perspectives that will help us steer our path in the current environment. We reiterate that this is still an ongoing process, he said.

Parekh assured investors that the board of directors of the corporation reviews the external participation of the EDs to ensure an optimal balance between broadening their perspective and managing the demands of their time.

Commenting on HDFC 's ability to avoid most of the challenges facing other housing finance companies, Parekh said this was possible because of diversification of funding and being conservative when the going was good. Our belief is that they are best used when they exercise their judgment and vote on resolutions based on substance and on a case-by-case basis rather than entirely outsourcing this effort, which is often an algorithm-based one-size-fits- all approach, said Parekh.

Last year, United States proxy consulting firm. ISS had advised investors to vote against the resolution to reappoint Parekh as non-executive President of HDFC as he is on the boards of eight other companies and time constraints may prevent him from discharging his duties effectively. Unlike domestic institutional investors, foreign fund managers largely vote based on recommendations made by proxy investors.

According to analysts, proxy firms adopt a checklist approach and consider a presence in multiple companies a distraction. In last year’s AGM , Parekh was reappointed President for three years by over 77% of voters, and Keki Mistry He was also re-elected to the board by more than 99% of the voters. Besides Keki, Renu Sud Karnad He is also an executive director on the corporation's board.

HDFC has always taken the position that it has a dual role - that of an operating housing finance company and a holding company for a financial conglomerate which includes investments in a bank, life u0026 general insurance companies, mutual funds and an education loan company . Directorships of HDFC 's executive directors in HDFC group companies is an extension of their responsibilities at HDFC. It would be erroneous to construe these principals as being over boarded, Parekh said.

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