SEBI’s Stewardship Code, 2019 & Institutional Investors in Corporate Governance

Abstract

There is no denying that Institutional Investors (hereinafter referred to as IIs) are a major source of financing to companies and enterprises. From only 12% of total global investments in the 1990s to almost 60% today, individuals have become more accepting of these investments and have invested in the likes of mutual funds, hedge funds, insurances, etc. However, the bigger role that these Institutional Investors play in ensuring good corporate governance is a relatively unexplored area. This relationship has been fortified in India recently with the SEBI Stewardship Code Regulation, that aims at making these investors ensure that the companies that they invest in follow proper corporate governance policies as well as make individuals who invest in institutions educated about undertaken corporate governance policies. This paper traces why and how IIs play a significant role in corporate governance and how Stewardship Codes are a welcome step in this area, bringing corporate governance in the ambit of SEBI.