Edelweiss Alternative Asset Advisors Limited
Stewardship Policy
Title Stewardship Policy
Release Date April 01, 2020
Version No. 1.0
Revision Date New Policy
Policy Owner Compliance
This document is the sole property of Edelweiss Alternative Asset Advisors Ltd (EAAA). Any use
or duplication of this document without express permission of EAAA is strictly forbidden and
illegal.
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STEWARDSHIP POLICY
Preamble
Edelweiss Alternative Asset Advisors Limited acts as the Investment Manager for various
Alternatives Investment Funds and /or their schemes (hereinafter singly referred to as the “AIF”
and collectively as the “AIFs”). These AIFs are governed by the SEBI AIF Regulations as well as
their respective Fund Documents (i.e. Private Placement Memorandum, Indenture of Trust,
Contribution Agreement and Investment Management Agreement). These AIFs raise funds from
the Investors in various segments including institutions, corporates, business houses, family
offices and high networth individuals.
The SEBI vide its circular dated December 24, 2019 has enacted the Stewardship Code for the
AIFs. The effective date of Circular is April 01, 2020. The Company as the investment manager of
the AIFs shall carry out the Stewardship activities for the AIFs operating under its domain.
As per their respective investment strategy and objectives, each of the AIFs carry out the
investment activity which includes making investments in listed equities. The investment team
of each strategy is expected to monitor and engage with the Portfolio companies on issues like
strategy, business performance, corporate governance and other related issues in order to the
best interest of the funds/schemes and/or the Investors thereof. This Stewardship Policy is set
of principles and guidelines to engage with the Portfolio Companies, deciding voting matters for
AIFs as shareholders and intervention scenarios.
This Stewardship Policy has been made in accordance with the SEBI circular dated December 24,
2019 and shall be applicable with respect to investments made in the listed equities by the AIFs
(and their Schemes) managed by the Company.
Definitions
“AIFs” means Alternative Investment Funds and the Schemes thereof time being managed by
the Company.
“Board” means the Board of Directors of the Company.
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“Circular” means the Circular dated December 24, 2019 issued by SEBI on Stewardship code for
all Mutual Funds and all categories of AIFs.
“Company” means Edelweiss Alternative Asset Advisors Limited which acts as the Investment
Manager of AIFs.
“Investors” means the investors or contributor or beneficiaries of the AIFs managed by the
Company.
“Portfolio Company” means the entity in which the AIFs or any of their Schemes have invested
in listed equity.
“SEBI” means the Securities and Exchange Board of India.
Stewardship Principles
While discharging the Stewardship responsibilities with respect to the AIFs managed by it, the
Company shall take into consideration the following principles:
- Fiduciary responsibility towards the AIFs/investors within the parameters of
professional confidentiality and regulatory framework;
- enhance AIFs/Investors’ value through productive engagement with the Portfolio
Companies;
- Take into account the prevailing corporate governance practices within the Portfolio
Companies;
- vote and engage with the Portfolio Companies on matters including environmental,
social and governance principles in the best interests of the AIFs/Investors; and
- Non solicitation of any unpublished price sensitive information from the Portfolio
Companies.
A training program shall be formulated for training of Investment team and Investment
Committee explaining the responsibility under the Code along with amendments, if any. This
may be done through external agency or internal team presentations. Investment Committee is
empowered to decide or amend the frequency and modalities of training under this Code.
Discharge of Stewardship Responsibilities:
The Company would discharge its stewardship responsibilities with respect to AIFs through one
or more of the following means:
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(i) Exercising voting rights on behalf of AIFs on the matters proposed for shareholders’
decisions by the Portfolio Companies, as may be necessary to protect the interest of
AIFs/Investors.
(ii) Encouraging for responsible corporate governance practices in the Portfolio Companies
as the need arises.
(iii) Participation in matters relating to material environmental, social and governance
opportunities in the as and when opportunity arises with respect to the Portfolio
Companies.
(iv) Co-ordinating and engaging on need basis with other institutional investors in the
Portfolio Companies towards a joint and collective approach.
Responsibility for oversight of the stewardship activities
The Investment team for each of the investment strategies shall ensure implementation of
stewardship principles as enumerated in this Policy for their respective Portfolio Companies. The
head of the respective fund management strategy shall monitor and oversee the stewardship
activities with respect to each strategy. The Company may avail the services of external agencies
in discharging its Stewardship responsibilities.
Notwithstanding the above, the ultimate stewardship responsibilities shall be discharged by the
Company.
Threshold for application of this Policy
The Stewardship principles enumerated in this Policy shall apply to those Portfolio Companies
wherein, one or more AIFs (or their Schemes) being managed by the Company cumulatively
holds 10% or more of the equity capital of such Portfolio Company. The Board of Directors of
the Company may review this threshold on need basis.
Managing Conflict of Interest
A conflict of interest exists where the interests or benefits of the Company, any Group Company
or employee conflict with the interests or benefits of AIF/Scheme or the Portfolio Company. The
Company being part of a financial conglomerate has various policies and procedures to manage
the conflict of interest. In the event any potential conflict of interest scenario arises, the
Company shall undertake reasonable steps to avoid such potential conflict of interest. In the
event of any doubt as to whether a particular transaction would create (or have the potential to
create) a conflict of interest, Investment Team shall consult with the Compliance Officer of the
Company.
While dealing with Portfolio companies, the Company may be faced with a conflict of interest,
inter alia, in the following instances, where:
- the Company and the Portfolio Company are part of same group;
- the Portfolio Company is a client of the Edelweiss Group;
- the Portfolio Company has existing business relationships with Edelweiss Group;
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- a nominee of the AIF has been appointed as a director on the Board of Portfolio
Company and has a fiduciary responsibility thereof;
- a director or a key managerial person of the Company has a personal interest in the
Portfolio Company.
Manner of managing conflict of interest: The Company will manage conflicts of interest
on the following principles:
- Avoid conflicts of interest where possible and keep the Investor’s interest above
- Identify and disclose any conflicts of interest and conflicted part not to take part of
decision making
- Employees being restricted to trade in any of the Portfolio Companies wherein the
AIF has made the investment
Further the matters pertaining to conflict will also be reviewed in accordance with the conflict
policy of the Company including the deliberation by the Conflict Management Committee. Once
the conflict of interest has been appropriately disclosed, the Compliance Officer will take the
required decisions and update the Company ’s Board of Directors appropriately.
Monitoring of Portfolio Companies
The Company shall monitor the Portfolio Companies in the following manner:
- The Investment Team shall be responsible for monitoring of the Portfolio Company’s
business strategy, performance, risk, capital structure, leadership effectiveness and
succession planning, remuneration, corporate governance performance, cultural, social
and environmental matters, which shall be on a best effort basis.
- The Investment Team may use publicly available information, management meetings,
independent research and industry information and shall engage with the Portfolio
Companies’ investor analyst calls, if held, to monitor the Portfolio Companies.
- The Company shall (to the extent feasible) attend general meetings and other meetings
convened by the Portfolio Company.
- The Company may nominate its representative on the Board of Portfolio Company,
wherever it deems necessary.
Active Intervention in the Portfolio Company
- The Company shall consider intervening in the acts/omissions of an Portfolio Company,
in which it has invested (acquisition cost) more than 1% of the Investment Assets of the
Company, as at the end of the immediately preceding quarter or 50 crores, whichever is
lower
- The Company shall intervene if, in the opinion of the Investment Team any act/omission
of the Portfolio Company is considered material on a case to case basis, including but
not limited to insufficient disclosures, inequitable treatment of stakeholders,
noncompliance with regulations, managerial remuneration performance parameters,
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governance issues, related party transactions, corporate plans/ strategy, CSR and
environment, or any other related matters.
Intervention by the Company:
The decision for intervention shall be taken by the Investment Team on a case to case basis
based on all available facts of Portfolio Company at that point of time. The intervention shall be
on the following lines:
- Engagement: The investment team shall take all reasonable steps to engage with the
management of Portfolio Company to seek clarification and resolve any concerns
including steps to be taken to mitigate such concerns.
- Re-engagement: In the event the management of the Portfolio Company fails to
undertake constructive steps to resolve the concerns raised by the investment team
within a reasonable timeframe, the investment team shall take all reasonable steps to
re-engage with the management to resolve the concerns.
- Escalation: In case there is no progress despite the first two steps, the investment team
may engage with the Board of the Portfolio Company (through a formal written
communication) and elaborate on the concerns. Further, the investment team may
internally refer the matter to the AIF’s Investment Committee for appropriate steps to
further action including to consider to enforcement of shareholders’ rights or to exit
from the Company. Any decision taken in this regard as per the Fund Documents of the
AIFs shall be final.
Collaboration with other Institutional Investors
The Company shall consider collective engagement with other institutional shareholders on a
general basis and in particular, when it believes a collective engagement will lead to a higher
quality and/or a better response from the Portfolio Company. The Company may approach, or
may be approached by, other institutional shareholders to provide a joint representation to the
Portfolio Companies to address specific concerns. The Company shall determine individually its
position on any issue requiring collaborative engagement and shall not act or be construed as
acting as a person acting in concert’ with other institution and will work in the best interest of
the AIFs/Schemes.
Voting and disclosure of voting activity
The Company may exercise its voting rights and vote on shareholder resolutions of Portfolio
Companies, as may be deemed necessary in the interest of the Investors.
Voting decisions shall be made in accordance with the Company’s voting policy, which is
available on the website of the Company.
Attendance at General Meetings: The Company shall attend general meetings on behalf of the
AIFs (or the schemes thereof) of the Portfolio Companies (annual as well as any extra ordinary
general meetings) where appropriate, and to the extent possible, actively speak and respond to
the matters being discussed at such meetings.
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The Company may take into consideration all the facts relating to voting and may record the
decision of voting as may be necessary on case to case basis.
Disclosure & Reporting
Company shall report periodically on their stewardship activities in the following manner:
The Company will disclose on website the implementation of the principles enlisted in the Code.
The format of disclosure will be approved by the Board and will be subject to regular updates.
Disclosures on the votes cast by the Company for all the resolutions put forth by the investee
companies for shareholders' approval will be published on quarterly basis. This Code, as
amended from time to time, will be disclosed on the website of the Company along with other
public disclosures. Any change or modification to the Code will also be disclosed at the time of
updating the code on the website. The Company in addition to the disclosure on its website as
specified above shall also circulate to unitholders a status report for every financial year, as part
of annual intimation to the investors. The report shall inter alia include details indicating the
compliance/ any variances with the principles laid down in this Code.
Review of the Code
This Policy shall be reviewed on annual basis by the Board of Directors of the Company or
whenever any changes are to be incorporated in the Code due to any amendment in the Circular
on Stewardship Code for AIFs in India or as may be felt appropriate by the Board of Directors.
