Proxy advisory firms are relatively new institutions in the corporate landscape but they play an imperative role and have gained popularity among the shareholders of the company
According to Regulation 2(1)(p) of the SEBI (Research Analysts) Regulations, 2014, ‘proxy advisor’ refers to any individual or any organization that prepares recommendations and gives advice for the institutional investors or shareholders
here the proxy advisory firms act as a helping hand and provide recommendations to shareholders according to which they can cast their vote on issues such as executive compensation, corporate governance, etc.
This mechanism of voting evolved according to the needs of society and the proxy advisory firms came into the picture that acted as third-party consultants and provided expert advice
Their main aim is to provide counseling to the shareholders but they can also be given the right to vote if they are expressly authorized by the stockholders.
This system was prevalent in the USA’s financial market from the 1980s
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