The curious case of LIC's voting on RIL, Adani resolutions

Life Insurance Corp. of India Ltd, or LIC, consistently approved or never opposed resolutions proposed before shareholders of Reliance Industries Ltd (RIL) or any Adani Group company since 1 April 2022, even as it rejected several similar proposals at other large companies, some even part of other conglomerates, a Mint review of about 9,000 voting decisions by the government-run insurer showed.

- Nehal Chaliawala & Varun Sood

This raises questions of how decisions are made at the country's largest money manager and whether it has different voting standards for businesses controlled by the country’s wealthiest tycoons versus other companies, experts said.

LIC, as the largest public shareholder in RIL and Jio Financial Services, approved all 63 shareholder resolutions put forth by the two companies over the last 14 quarters, a period when it rejected or abstained from voting on similar proposals at other firms.

At Adani-owned companies, LIC approved 351 of 368 resolutions and abstained from voting on the remaining 17. It didn’t reject a single Adani Group shareholder resolution even as it rejected comparable proposals more frequently at non-conglomerate companies.

There have been at least five instances with RIL, India's most valued company, where LIC’s voting has raised questions about inconsistencies in its policy. The insurer holds a 6.94% stake in the refining-to-retail giant valued at around ₹1.47 trillion as of Wednesday and accounting for nearly 3% of its assets, Mint calculations show.

None of the other large Indian conglomerates have received complete approval for all their shareholder resolutions from LIC during this time.

In all, of the about 9,000 resolutions since the beginning of fiscal year 2023 (FY23), LIC voted in favour of over 92% of them and abstained from voting on another 6%. It rejected just under 2% of the resolutions.

The insurer owns more than 1% stake in over 300 companies as per a review of its voting disclosures.

LIC's voting record highlights a potential risk: inconsistent standards, as detailed in this story, have an impact on how the insurer manages its 57.23 trillion ($645 billion) in assets under management as of September. The fiduciary duty it has to its crores of policy holders and investors whose money it invests in stocks, mutual funds, and government securities is detailed in its 'stewardship code'.