Somewhere in the quest for scale individualism goes for a toss. All doctors are urged to think in a particular way by the pharma industry. All Chartered Accountants are part of a body which either guides or prods them to think on same lines..somewhere the independent thinking individual is being smothered if not killed.

Look at the US – it is worse. When there is so much anti ‘high salary’ sentiment how is it being passed by the shareholders of the big corporates? Welcome to the mutual fund industry! If my biggest income is from the 401(k) plan will I vote against the guys who are giving me the mandate. You got to be joking. The US introduced the estate duty – not sure about the date but I think post depression (circa 1930). This meant many rich people were decimated (India in 1950s upto 1985 did it) (completely different matter that Rajiv had it abolished because he did not want to pay it himself :)). So the shareholding shifted from the individuals to the corporates. A new intermediary called the mutual fund came in and took away the pension creating function (after all the contributions came from the corporations and the individual’s contribution).

Adam Smith who spoke of free markets must not have estimated this huge agency problem. There are just too many executives who do not create any shareholder wealth but create own personal wealth. Some corporate events rival what the King of Punjab did during his times.

So how does one protect the shareholders? Difficult, but having created a couple of layers between the company and the guy who is investing, the amount of responsiblity goes down.

Why SEBI cannot insist that mutual funds should disclose how many AGMs they attended, what questions they asked, how they voted (on their website and on the SEBI website)….I have no clue. Answers will be appreciated – even attempts will be encouraged.

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