Institutional Investors in the Indian Securities Market

Submitted to – Prof. (Dr.) Harpreet Kaur and Dr. Aparajita Bhatt

Submitted by – Deepika Parya, 35LLB16

National Law University Delhi

2021

1
Acknowledgement
I would like to thank Prof. (Dr.) Harpreet Kaur and Dr. Aparajita Bhatt for their invaluable
guidance and contribution to this academic research paper. I truly appreciate their kindness
and ability to manage their duties perfectly during such hard times. All the information in the
paper has been correctly sourced and given full credit. This paper is free of any plagiarism to
the best of my knowledge.

Thank you

Deepika Parya

35LLB16

NLUD

2
Table of Contents

Acknowledgement 2

Introduction 4

Literature Review 4

Research Objectives 5

Hypothesis 5

Research Questions 5

Chapter 1 - Role of institutional investors 6

Chapter 2 - The Stewardship Code 9

Chapter 3 - Comparative Analysis with UK, Netherlands, South Africa, Japan and Canada 13

Conclusion and Suggestions 17

Bibliography 19

3
Introduction
Any person or entity that invests capital in another person or entity with the expectation that
they will get some monetary gain or return in the future is an investor. There are different
kinds of investors like angel investors, sweat equity investors, venture capitalists etc. One
such type of investor is called an institutional investor. Any legal entity that collects funds
from multiple investors whether private or public and then invests those funds in two
different types of financial organisations in order to profit from them is known as an
institutional investor. This means that an organisation that invests money on behalf of its
members like banks, credit unions, Mutual funds, insurance companies, venture capital
funds, pension funds, etc., are considered institutional investors. They have a large
influence over the market and they face fewer restrictive regulations as a result. They invest
in large amounts and are expected to act as caretakers or stewards for their beneficiaries and
clients. Institutional investor activism in India started due to Life Insurance Corporation v.
Escorts Ltd., 1986 AIR 1370. This research paper provides a comprehensive overview of
what institutional investors are and what are their rights and liabilities and it also examines
the stewardship Code to be framed and adopted by institutional investors and examines in
detail the research objectives as listed below. It also pursues a comparative analysis of
stewardship codes with that in other countries.

Literature Review
The literature examined for this research paper was thoroughly detailed and
very educational. The different types of books and articles that were read pertained to
Materials Exploring the meaning and functions of investors and its different
types, specifically focusing on institutional investors. a large portion of the Literature
focused on how institutional investors operate and how they can contribute to the corporate
governance of a company. This was investigated both globally and from an Indian
perspective. There were debates regarding whether or not the involvement of institutional
investors in corporate governance is beneficial to the functioning of the company or
not. Stewardship codes of different countries were analysed in detail. the main focus was on
studying the principles of the stewardship code that was published by SEBI last year and then
a comparative analysis was drawn with the stewardship codes of different countries. The
UK stewardship Regime was examined as it made the basis for the Indian stewardship
code. Further differences between the corporate structures of the two countries were drawn
out in order to c y same style of stewardship regulations could not work in an Indian

4
setting. Additionally, stewardship codes of countries with similar corporate structures as that
of India was studied in order to make suggestions that would improve the current Indian
stewardship code.

Research Objectives
1. To study the role of institutional investors in the corporate governance of companies
2. To study the principles under the stewardship code
3. To analyse the Indian stewardship code with that of other countries.

Hypothesis
While the Stewardship code has been framed rightly to improve investor protection as well as
good corporate governance, the way forward for AIFs and MFs to kick-start the
implementation of SEBI’s circular is an uncertain and complicated issue considering the
global pandemic situation due to coronavirus. AIFs and MFs have a lot to accomplish
currently in terms of framing of the policy with a holistic approach of covering all the
principles.

Research Questions
1. Whether institutional investors have strong rights and liabilities for engaging in
corporate governance in context of the Stewardship Code?
2. Whether the Stewardship Code is suitable to the corporate governance structures of
India?
3. Whether other nations have Stewardship Codes that are more suitable to the Indian
scenario?

5
Chapter 1 - Role of institutional investors
What is an Institutional Investor?

An investor who manages, sells and buys bonds, stocks and other different investment
securities in the name of their customers, shareholder, clients or members is known as an
Institutional Investor. Generally, there are six broad categories of institutional investors:
commercial banks, hedge funds, mutual funds, insurance companies and pension funds. Such
investors don’t have to face as many protective regulations as regular investors because they
are considered to be more capable of protecting themselves due to being more
knowledgeable.

There are many resources and special knowledge that retail investors cannot access but that
institutional investors have the access to for the purposes of researching different investment
opportunities. Institutions deal in large quantities of shares and therefore have a huge effect
on the supply demand chain in the securities in the market. This means that they can in turn
also influence the securities’ prices. 1

Institutional Investors vs. Retail Investors

Both institutional and retail investors work in many different types of markets but because of
the virtue of securities and the way in which transactions work, there are some areas of the
market that are mainly for institutional investors. Retail investors typically work with shares
that numerically measure up to around 100 or more but institutions on the other hand deal
with tens of thousands of shares and more. Because of this, the stocks of smaller companies
are not bought by institutional investors. Firstly, in a small traded stock, if institutions buy or
sell large number of shares then it can heavily fluctuate the share prices by creating sudden
supply and demand. Secondly, it may violate securities laws.

Role of Institutional Investors in Corporate Governance

Corporate governance is “the system of laws, rules, and factors that control operations at a
company.”2 Since institutional investors deal with such a big number of shares, therefore they
can involve themselves in practicing good ethics of corporate governance. The public entrust

1
Vedant Shukla, Corporate Governance at Crossroads, (2007) PL Sept. 7
2
Gillan, S. and Starks, L., 2000, “Corporate governance proposals and shareholder activism: The role of
institutional investors”, Journal of Financial Economics.

6
institutional investors with their funds and thus these investors have most of the public’s
household income. These institutional investors are acting in a fiduciary capacity as they have
to safe keep the money of the public. It is their responsibility to make sure that the decisions
they take are in the best interest of the companies and guide the companies to operate in an
ethical fashion. There is need of implementing structures of corporate governance that steer
the institutional investors to play fair in the decision making process and be transparent in
their assessment and review of the companies.3

Corporate governance of a company has a mutual relationship with the institutional investors.
The determination of how many institutional investors would be willing to invest in a
company and to what extent is dependent on the corporate governance practices exercised by
the firm. Also, if a company has a strong base regarding its institutional investment then it
leads to greater monitoring and as a result finer corporate governance of the company.4

Many institutional shareholders do not play an active role in company management and
instead they sell their shares. This affects the market as it leads to fall in stock prices. It is
better for smaller investors to not get involved in corporate governance matters of a company
because it is not cost effective. Institutional investors can be either sensitive or insensitive to
pressure. Investors who agree with majority opinion are known as pressure sensitive investors
whereas investors who don’t readily agree with the majority and rather speak their own
opinions are known as pressure insensitive investors. If the Board’s decisions is something
that the institutional investors do not agree with, then they have the option to either speak up
about their disagreement or not speak up and keep their dissatisfaction to themselves or they
could just exit the company.5

Role of institutional investors in corporate governance in India

Indian companies have a lot of major contributions from institutional investors. With time,
institutional investor activism is gaining more and more importance in India, although it is
still not very prevalent. The number of investments that are being made by institutional
investors in different companies is on an increase. The flow of FDI and FII in India has

3
Carmen Juravle and Alan Lewis ‘Identifying Impediments to SRI in Europe: A Review of the Practitioner and
Academic Literature’ (2008) 17 ER 285
4
Editorial Analysis-Satyam scam and Corporate Governance, c.f.
<http://pibmumbai.gov.in/scripts/detail.asp?releaseId=E2009FB6> last visited on 8th April ,2021
5
Chidambaran, N. and K. John, 1997, “Relationship Investing and Corporate Governance,” working paper,
Tulane University and New York University.

7
increased thanks to the policies that have been promulgated by the Indian government. But
the huge problem is that these investors do not practice their participation like voting rights in
a meaningful way. The monitoring role that is assigned to whatever institutional investor is
either not present or has a very weak visibility in Indian Companies. And the smaller the
company is, the more negligible the visibility of such monitoring.

Corporate governance in India is determined on the basis of the Organisation for Economic
Co-operation and Development. The principles given by OECD are not by themselves
binding but the government can make the decision to adopt these principles and then apply
them.6 Along with the rules and regulations that are issued by the Ministry of company affairs
and SEBI, clause 49 of the Listing Agreement governs most companies’ corporate
governance.

Important ownership functions and the rights of the shareholders are one of the key principles
that are highlighted in the OECD principles.7 The meaning of this is that all the rights of the
shareholders must be protected and facilitated. But there have been many cases filed because
of malpractices despite so many rules and regulations provided by SEBI and the Companies
Act. This happens because the shareholders have many rights on paper but they are not really
exercised in reality. The involvement of the shareholders in the meetings of the company is
negligible and they do not properly use their voting rights in a meaningful way or rather do
not exercise them at all. This is why investor activism is so low in India compared to other
countries. There is a need for institutional investors to get more involved in the Governance
of the companies to avoid malpractices of this kind.

The corporate governance standards are not improving due to low levels of investor activism
among institutional investors in India. Most companies in India are run by family groups and
so institutional investors have to play their role and demand better accountability and
transparency from these companies. This can only happen if institutional investors are
proactive in their participation when it comes to corporate governance. This is the only way
that standards of corporate governance can be raised in our country.8

6
Dr.P.T.Giridharan, Principles of Corporate Governance: OECD Annotations to Indian Connotation, c.f
<http://icai.org/resource_file/8141Principles%2520of%2520Corporate%2520Governance%2520-
%2520OECD%2520Annotations%2520and%2520Indian%2520Connotations%5B1%5D.pdf>, last visited on
8th April, 2021.
7
ibid
8
Dr. Julia Mundy, ‘Is the Stewardship Code fit for the Purpose?’ (2015) 15(1) CIMA Global Academic
Research Program

8
Chapter 2 - The Stewardship Code
On December 24 2019, the Securities and Exchange Board of India issued a stewardship
code which gives out many obligations that must be followed by mutual funds and
alternative investment funds a k a institutional investors, in the role that they play as investors
in the listed Indian companies.9 Stewardship means supervising something that is entrusted
to your care. Institutional investors as stewards shall make sure that the investee company is
not mishandling their client’s money and that it is getting beneficial returns. This code was
meant to come in set in April but due to the coronavirus pandemic is postponed to July of
2020.10 This stewardship code became applicable from July 1 2020. This applies to listed
equities only and not to investments by Institutional Investors in listed debt.

Rights and Liabilities

This code is made for institutional investors who have the responsibility to improve their
monitoring mechanism and engagement in their investee company for that clients and
beneficiaries. It broadly covers six areas: Responsibilities, Monitoring, Conflict of interest,
Voting and disclosure, Intervention and collaboration Periodical reporting.

Since many companies are struggling with issues regarding their reputation right now
therefore this new code has been issued at the correct time. This way the companies have a
very nice opportunity to have a dialogue with their institutional investors and show them
what pros and cons their business models have. Starting a dialogue like this will invite more
participation from the institutional investors which will lead to better corporate governance.11

Having a dialogue like this would also help the company's in getting to know what the voting
preferences of the investors are before they take any big corporate actions. On the other hand
this will also benefit the institutional investors by giving them more information and details
regarding the company said they are investing in which will in turn help them make better
and more informed decisions. And this whole process will in the end be of great benefit to
the original investors.12

9
circular no. CIR/CFD/CMD1/ 168 /2019
10
circular number SEBI/HO/CFD/CMD1/CIR/P/2020/55
11
Brent, A., 2002, Some Funds try Shareholder Activism, Mutual Fund Market News 10: 1.
12
Alice Klettner, ‘Impact of Stewardship Code on Corporate Governance & Sustainability’ (2017) BSUT
<https://www.researchgate.net/publication/325358712> accessed 13 April 2021

9
SEBI decided to include alternate investment funds and Asset Management companies
within the ambit of its stewardship code as well which means that it requires them to to avoid
conflicts of interest and establish transparent voting policies and monitor the investee
companies. 13

The stewardship code is based on principles that help institutional investors in taking care of
their responsibilities towards their beneficiaries and clients by protecting and enhancing the
value of their shares. Institutional investors own a large proportion of various companies and
therefore they represent public funds in a direct or indirect way. 14 Thus stewardship code
obliges them to do a better job. SEBI clarifies that the Principles do not mean that the
investors are invited to manage the company’s affairs. The principles also do not bar the
investors from selling shares if that is for their clients or beneficiaries.

Principles

The six principles that are given in the stewardship code are as follows:

Principle 1: Institutional Investors should formulate a comprehensive policy on the discharge

of their stewardship responsibilities, publicly disclose it, review and update it periodically.15

SEBI does not put any bar on institutional investors from outsourcing their responsibilities
regarding the stewardship. But if investors decide to outsource the responsibility they must
have a mechanism that makes sure that their responsibilities are being taken care of properly.
Such mechanisms should be given in detail in the stewardship policy. This helps make sure
that the entity that is given the responsibility to take care of investor duties is actually doing
so in a diligent fashion and that they can be held accountable for it. There is also a
requirement for a comprehensive policy that detail out training procedures to be followed by
the personnel that have to implement the principles of the stewardship code.

Principle 2: Institutional Investors should have a clear policy on how they manage conflicts
of interest in fulfilling their stewardship responsibilities and publicly disclose it.16

The policy regarding conflict management should be made while keeping in mind that the
interests of the clients and beneficiaries of the institutional investors are more important than

13
ibid
14
ibid
15
Ibid,
16
ibid

10
the interest of the investors themselves. The clients take priority here. If in any case the
interests of the clients or beneficiaries are different from each other than the policy regarding
conflict management should have a mechanism that addresses how the situations have to be
handled. It should mention what assistance must be taken in different situations. There shall
be a committee set up for this specific purpose of dealing with conflicts of interest.
Everything that is included within this conflict management policy must be made public in
the name of transparency and it should be updated and reviewed from time to time.

Principle 3: Institutional Investors should monitor their investee companies.17

Matters like business strategy, board structure, financial performance, diversity, operation
performance, remuneration, party transactions, corporate governance, capital
structures, opportunities and risks, rights and grievances of shareholders of the investee
company should be monitored by institutional investors. Depending on the type of Investee
Company, the level of monitoring can vary. Mechanism for proper levels of monitoring shall
be put in place by institutional investors. a higher degree of monitoring may be required for
the companies that have larger Investments whereas low levels of monitoring may suffice for
companies where smaller or negligible investments have been made from the institutional
investors point of view.

There has to be a specific policy that the institutional investors follow for monitoring investee
companies. This policy should mention what kind of specific areas are being monitored and
what are the mechanisms that are being put in place for such monitoring. This policy should
also keep in mind not to violate any insider information rules and should have a mechanism
in place that takes care of situations where such regulations may have been violated.

Principle 4: Clear policy on intervention in their investee companies.18

Poor financial performance, remuneration, practices related to corporate governance, ESG

risks, strategy, litigation, leadership issues, etc. are some of the situations that may require
intervention. To resolve the issue in a constructive manner, the intervention may take place
through the mechanism of meetings and discussions. If the situation escalates, then meetings
can be held with members of the board and voting can take place to show opposition
regarding certain decisions. The policy needs to list out various levels at which different

17
ibid
18
ibid

11
degrees of intervention maybe required. A committee can also be formed to design
mechanisms regarding this issue in specific situations. The policy and mechanisms shall be
disclosed. Collaboration with other Institutional Investors can be done where required. This
may be done to preserve the interests of the ultimate investors.

Principle 5: Institutional Investors should have a clear policy on voting and disclosure of
voting activity.19

Institutional Investors should do an in-depth analysis on the investee company’s decision

while exercising their voting rights. They shouldn’t avoid their voting responsibilities.
Instead of just going along with what the management proposes, the institutional investors
should be proactive in their voting rights. They should have a detailed and comprehensive
policy regarding voting. It should include specific guidelines that provide information on how
to exercise your voting rights in specific matters. Like it should give a list of all the factors
that must be considered before making a decision, what are the kinds of circumstances that
could possibly affect your decision of voting for or against a motion. A committee shall be
formed to govern such matters, specifically where escalation mechanisms are required to be
employed. It should also look at issues of conflict of interest when it comes to voting. It
should consider all alternatives like proxy voting or voting advisory services along with
voting policy and voting decisions. The policy guidelines must be disclosed publicly.

Principle 6: Institutional Investors should report periodically on their stewardship activities.20

To keep a system of checks and balances, the clients and beneficiaries shall me made aware
of how the institutional investors have been taking care of their stewardship responsibilities
from time to time. Institutional investors can upload a report on their website for this purpose
and should be periodically updated regarding different policies.

19
ibid
20
ibid

12
Chapter 3 - Comparative Analysis with UK, Netherlands, South Africa,
Japan and Canada
United Kingdom

The stewardship code that SEBI presented was fully based on the stewardship code of United
Kingdom.21 Therefore the Indian stewardship code does not take into account the variations
in corporate structures between UK and India and also does not project the reasons behind
wanting to ensure good corporate governance practices.22 in India, the shareholding
structure is a concentrated, where most of the shares or owned by the promoters and the
members of their family. But the UK has a shareholding structure that is more dispersed. It
allows institutional investors to participate in measures for corporate governance and also
allows them to hold major shares in a company. Therefore in India, the voices of the
institutional investors would be seldom heard due to the insignificant holding.

Additionally, UK and India have very different stewardship goals.23 For UK, the main
objective is to protect the interests of the clients in beneficiaries of the institutional investors
by focusing on enhancing shareholder value.24 But India has a pluralistic corporate structure
which means that focuses on the interests of not only the beneficiaries of the institutional
investors but all stakeholders. Section 166 of the Companies Act 2013 focuses on “the
fiduciary duties of the director to, act in good faith promote the objects of the company for
the benefit of its members as a whole, and in the best interests of the company, its employees,
the shareholders, the community and for the protection of environment.”

Further, the provisions in the Companies Act 2013 that focus on corporate social
responsibility also indicate an inclusive stakeholder approach. The main aim includes
benefiting the whole Society at large and not just the clients of institutional investors. In
wanting to imitate the UK Regime of stewardship, India has wrongly focused on the interests
of the beneficiaries of institutional investors instead of focusing on the uniqueness of Indian
corporate governance. Although UK stewardship regime does not work for India, there are

21
UK Stewardship Code, 2012, < https://www.frc.org.uk/getattachment/d67933f9-ca38-4233-b603-
3d24b2f62c5f/UK-Stewardship-Code-(September-2012).pdf > last accessed on 5 May, 2021
22
Gillan, S. and Starks, L., 2000, “Corporate governance proposals and shareholder activism: The role of
institutional investors”, Journal of Financial Economics.
23
Guy Jubb & Mohanty, An India Stewardship Code: Imperatives and Challenges, (National Stock Exchange,
October 2017) <https://www1.nseindia.com/research/content/res_QBOctober17.pdf> accessed 6 October 2020
24
Companies Act 2006, sec 172 (UK)

13
other countries who have similar corporate goals as India you have successfully create a
better suited stewardship code that India could take inspiration from.25

Netherland

Just like India, Netherlands also focuses on creating benefits for all stakeholders of the
company and therefore the Netherland stewardship code reflects that responsibility regarding
all stakeholders and not just beneficiaries of the institutional investors. They have a broad
approach when it comes to stakeholders. Its main focus includes increasing value for the
whole Society at large and therefore India could use the same approach for our stewardship
code.

South-Africa

It is very important to focus on environmental, social and governance (ESG) factors while
determining investment decisions for a more reliable financial performance prediction. The
Indian stewardship code doesn't put enough focus on the ESG factors. Although there are
guidelines that make it essential to comply with ESG norms and disclose them, there is not
enough force behind the implementation of the guidelines and therefore there isn't
much adherence towards ESG norms. a solution can be found within the South African
stewardship regime. They have made hard law which makes it compulsory for one to comply
with ESG norms.26 The minister of Finance in South Africa issued regulations under their
pension funds act27 necessary for them to uphold and integrate ESG factors. It is even
mentioned in the Preamble of the act. Similarly, the Hong Kong code28 also makes it
mandatory to adopt ESG norms by putting in the principles itself how important they are for
the reputation performance and goodwill of the companies. Both South Africa and Hong
Kong make it punishable to not comply with ESG norms. India could take some inspiration
from the method used by these countries to employ a more efficient mechanism to adopt
ESG norms into the main framework of the stewardship code instead of just lightly
referencing it. Doing this also fits well with the all rounded stakeholder approach that is
followed by our country.

25
Mr Kumar Mangalam Birla's views on Corporate Governance, c.f.
<http://www.bridgeindia.org/hindalco/corpnews.htm> last visited on 8th April, 2021
26
Khanna, T, J. Kogan, and Palepu, K., 2002, “Globalization and Similarities in Corporate Governance: A
Cross-country Analysis,” working paper, Strategy Unit, Harvard University
27
Pension Funds Act, 1956 (South Africa)
28
Hong Kong Stewardship Principles of Responsible Ownership, 2016

14
Japan

In India, the promoter group generally holds majority shares therefore there is a concentrated
shareholding structure that is popular here. The promoters are involved in the daily
management of the company there also on the board. Therefore directors and Promoter
groups should also be included within the definition of responsibilities and duties of
stewardship instead of limiting it to institutional investors. This is exactly what the Japanese
stewardship code has done. Therefore India can learn from them. The duties of the board of
the company are complementary with the stewardship duties of institutional investors under
the Japanese stewardship code. This means that both institutional investors and the board of
the company have equal responsibility as stewards of the company. This ensures good
governance practice forgiving equal participation to external investors and internal
management. This also means that the board is responsible for important policy and business
decisions. Limiting investors’ powers to interfere with board decisions also means that there
are less chances of negative investor activism and micro management of the company.29

Canada

Balancing the stakeholder approach with the shareholder approach can be difficult but the
Canadian Code30 manages to provide a good solution for this problem. Along with
improving the long term value of the firm, the Canadian code also pushes institutional
investors to improve the overall mechanics and effectiveness of the board and its committees
while also decreasing the risks. This is one of the aims and objectives of the stewardship
code of Canada. It engages institutional investors to make sure that there is transparency in
the workings of the board of the company as it benefits the whole company in the long run
and not just the clients and beneficiaries of the institutional investors. This is a broader
approach that benefits both the company and the society. India could add principal that
achieve the same effect and is more stupid to the Indian scenario.

Studying the stewardship codes of the aforementioned Nations could make the Indian
stewardship code more suitable and effective when it comes to corporate governance because
of the unique nature of Indian corporate structure. The stewardship code of India must be

29
Gen Goto, ‘The Logic and Limits of Stewardship Codes: The Case for Japan’ (2018) CALS Working Paper
Series, <http://law.nus.edu.sg/cals/wps.htm> accessed 7 November 2020
30
Canadian Stewardship Code, 2017, https://ccgg.ca/stewardship-principles-endorsers/.

15
made while keeping in mind that special features of the Indian corporate governance are
dependent on significant roles of promoters and the special nature of conflicts of interest.

16
Conclusion and Suggestions
During the last decade stewardship codes have become very popular all over the
world. Advocacy for stewardship codes definitely started from the United
Kingdom. Although India tried to make a stewardship code that was based off of the UK
style regime, it is not really suitable due to the unique and special features of the corporate
market in India and therefore calls for a different approach.31 While there are efforts being
put into creating a more Wholesome stewardship code that encompasses the different features
of Indian corporate governance, such efforts are scattered at best. It is important right now
two frame a code that is encompassing different types of institutional shareholders and
regulate investor stewardship in a better way.

One of the conclusions of this research paper is that institutional investors are very important
for more efficient and smooth running mechanisms of corporate governance within a
company. Increased participation from institutional investors in monitoring and managing
conflicting interests when it comes to the investee company are important moving
forward. Transparency, clear voting policies and disclosing important information
is essential for the working of the company in a fair way. Therefore institution busters are
encouraged to participate in creating this transparent atmosphere within Indian corporate
markets. When decisions made by board meetings are Ling evaluated and checked up on by
institutional investors without violating any insider trading regulations, it makes sure that all
the decisions are being made in the best interest of the beneficiaries and clients of
the institutional investors but also the board members and promoters that manage the
company. In return the beneficiaries also get to stay updated about how their funds are being
managed by the institutions as they are required to disclose that information publicly.

There is still a discussion regarding whether or not involvement of institutional investors in

the management of the company is a good thing or a bad thing. Investor activism can also be
negative when it results in micro management of the company but it can also be a good thing
when it leads to transparency and a system of checks and balances that benefit everyone.
Some are of the opinion that institutional investors must actively participate as per their
stewardship duties for a better corporate governance environment whereas others are of the
opinion that this is not a good route to take because the institutional investors are not properly
informed and therefore cannot make good decisions that are in favour of all the

31
Umakant Varottil, ‘Shareholder Stewardship in India: The Desiderata’ (2020) NUS Law Working Paper
Series < http://law.nus.edu.sg/wp> accessed 15 April 2021

17
stakeholders.32 This research paper is of the opinion that better monitoring and good
corporate governance practices by institutional investors leads to better outcomes and
institutional investors must be given more solid opportunities to practice their stewardship
duties to the best of their ability.

32
Grossman, S., and O. Hart, 1980, “Takeover Bids, the Free Rider Problem, and the Theory of the
Corporation,” Bell Journal of Economics 11.

18
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20