Stewardship Policy

Preamble and scope of policy on Stewardship Responsibilities:

The Policy is framed to discharge Stewardship responsibilities in accordance with the guidelines set out by SEBI vide its master circular ref SEBI/HO/AFD-1/AFD-1-PoD/P/CIR/2024/39 dated May 07, 2024. As a part of this activity, the investment management team is expected to monitor and engage with the investee company on matters including performance (Operational, financial) etc., strategy, corporate governance, including (Board structure, remuneration etc.), corporate governance, opportunities or risks, capital structure etc. and any other issues such that the interest of the investors are protected.

This policy will be referred to as the Stewardship Policy to include responsibilities to be undertaken by Colossa Ventures LLP for its Alternative Investments Fund’s business (“Firm”) and the processes that The Firm intends to follow to safeguard the interest of the investors.

This policy is applicable to AIFs (Alternative Investment Funds) managed by the Firm, for its investments in listed equities above the threshold, in aggregate, of 5% of paid-up capital of the company in its schemes.

Effective Date:

This policy will be effective immediately on its approval and would be reviewed and updated on an annual basis or as and when there are regulatory changes. Any material changes in the policy will also be approved by the Investment Committees of AIF (“IC”), if any. The IC shall inform the changes in the policy to the Board of Partners of The Firm.

Stewardship Principles

In order to safeguard the interest of the investors, The Firm shall work towards fulfilling the objectives of the following principles.

Principle 1

The Firm has designed a comprehensive policy on the discharge of their stewardship responsibilities. The Firm will publicly disclose it, review and update it periodically.

  • a) Policy on Active Engagement includes:
    1. The Firm shall continuously monitor and actively engage with investee companies, where investment is large (i.e. where investment by any scheme of the Firm is more than 5% of the paid up capital of each company– referred herein after as “Large Investment”) on various matters including performance (Operational, financial etc.), strategy, corporate governance 2 (Including Board structure, remuneration, etc.), corporate governance opportunities or risks, capital structure, etc.
    2. Will endeavour to vote and engage with investee companies in a manner consistent with the best interests of its investors and in alignment with the definitive documents signed with the investee company.
    3. Maintaining transparency in reporting its voting decisions and other forms of engagement with investee companies
  • b) Policy on Discharge of Stewardship responsibility
    1. The Firm to follow the voting policy formulated and any modifications/amendments thereto (“Voting Policy”) to deal with the exercise of the Company’s voting rights in investee companies.
    2. The Firm shall appropriately monitor and engage on an issue which may potentially, affect an investee company's ability to deliver long term sustainable performance and value for threshold of Large Investment
    3. The engagement with Investee Company may be through written communication, detailed discussions with management, interaction with investee company boards, voting in board or shareholders’ meetings, etc and in alignment with the definitive documents signed with the Investee companies.
    4. The Firm shall endeavor to work collectively with other institutional investors and support collaborative engagements organized by representative bodies and others for threshold of Large Investments.
    5. The Firm shall disclose compliance to the Policy and the principles therein on its website on an annual basis.
  • c) Oversight of Stewardship activities:
    • IC of the Firm shall ensure that there is an effective oversight of The Firm’s stewardship activities. The IC shall be responsible for the overall implementation and execution of this Policy. The investee company used in this Policy shall mean Investee companies in which The Firm has made equity investments for its schemes. The IC shall recommend the changes in the policy to the Board.
  • d) Disclosure of Stewardship Code
    • The policy shall be reviewed and updated periodically, and the updated policy should be disclosed on the Firm’s website.
  • e) Training Policy
    • Current investment team and any new joiners in the future may be trained on the various aspects of implementing the stewardship policy.

Principle 2

The Firm has designed a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

Conflict of interest refers to instances where personal or financial considerations may compromise or have the potential to compromise the judgment of professional activity.

The policy shall be reviewed and updated from the point of view of considering conflict of interest, if any.

  • a) Avoiding conflict of interest:
    • The Firm shall undertake reasonable steps to avoid actual or potential conflict of interest situations. In unavoidable situation, conflicts of interest shall be resolved in the best interests of the unit holders of the Firm.
    • In the event of any doubt as to whether a particular transaction would create (or have the potential to create a conflict of interest, the Designated Partners of the Firm may be consulted.
  • b) Identifying Conflict of interest
    • Given below are a few instances where conflict of interest may arise:
      1. The Firm and the investee company are part of the same group
      2. The Investee Company is an associate of the Firm
      3. The investee company is an institutional investor in any scheme of the Firm
      4. The investee company is a distributor of products / services offered by the Firm
      5. The investee company is a vendor of the Firm
      6. A nominee of the Firm has been appointed as a director or a key managerial person of the investee company
      7. Anything other than the above, which may give rise to conflict of interest.
  • c) Managing conflict of interest:
    1. A conflict of interest in relation to an investee company shall be highlighted to the IC and get recorded. All decisions pertaining to votes will be taken in the best interest of the unit holders of the Firm. In instances where the investments are in the group companies of the Firm or the investee company has substantial investments in the schemes of the IC of the Firm, will specifically review all such proposals and will take voting decisions in the best interest of unit holders.
    2. Apart from strict adherence to Code of Conduct of the Firm, the IC shall ensure strict compliance with the Code of Conduct for Prevention of Insider Trading in compliance with SEBI (Prohibition of Insider Trading) Regulations.
    3. Member of the investment team, who is interested or have any association with the investee company, will not be allowed to participate in voting.
    4. Rationale for voting on each shareholder resolution shall be recorded.
    5. Detailed rationale behind every new investment decision shall be recorded.

Principle 3

The Firm monitors their investee companies.

Manner of Monitoring:

  1. Monitoring shall include but need not be restricted to strategy and business outlook, operation and financial performance, Industry analysis, management evaluation and corporate governance issues including board structure/diversity, related party transactions, handling of shareholder rights, their grievances, capital structure and key risk areas. Monitoring on areas like succession planning, remuneration, corporate governance, opportunities or risks issues will be on a best effort basis.
  2. The Firm shall actively monitor all investee companies.
  3. Designated Partners of the Firm shall review the monitoring and engagement activities being carried out by the investment team keeping in mind regulations on insider trading and would ensure the compliance of the regulations.
  4. The Firm may rely on sources for monitoring activities of investee companies like:
    1. Quarterly Reports (On calls)
    2. Annual Reports
    3. Publicly available information
    4. Management Interaction includes conference calls
  5. The Firm will endeavor to have at least one interaction/ engagement with the investee company in a year for Large Investment. However, there can be investee companies where the management is not accessible or not accessible at appropriate levels or cases where the investment team believes that there is no incremental information which is being provided by the management. In such cases, it is possible that the monitoring is through other sources including participation in AGM/Voting on shareholders’ resolution or engagement through external agencies.
  6. During engagement with the investee company, employee may come to know about unpublished price sensitive information (UPSI). Employee shall maintain strict confidentiality of such UPSI and shall not share such UPSI with anyone inside or outside the organization. No investment/disinvestment decision shall be taken based on such UPSI.

Principle 4

The Firm has designed a clear policy on intervention in their investee companies. Institutional investors should also have a clear policy for collaboration with other institutional investors where required, to preserve the interests of the ultimate investors, which should be disclosed.

Intervention Policy

The Firm may intervene or collaborate with other institutional investors in case of Large Investments

Identifying possible circumstances of active intervention:

  1. Poor financial performance of a company for instance a sharp miss vs. earnings guidance or long-term financial targets
  2. Related party transactions especially relating to ICDs, royalty, to associate concerns.
  3. Improper excessive Director/Executive remuneration in relation to the annual profits or overall financial performance
  4. Inequitable treatment of shareholders especially in corporate action/M&A
  5. Lawsuits/Litigations arising out of whistleblower complaints
  6. Insufficient or inaccurate disclosures on financial statements or material auditor qualifications including instances of resignations by auditor(s)
  7. Non-compliance with regulations and adoption of ESG standards on best effort basis.

Mechanism of intervention:

a) Engagement: The Firm shall endeavor to have communication with individual investee companies, have one-to-one meetings with the management team, engagement with specific teams etc. to resolve any concerns including steps to be taken to mitigate such concerns.

b) Collaboration: The Firm shall endeavor to work collectively with other institutional investors and support collaborative engagements by professional associations, if any, and other entities it deems necessary for a collective engagement or joint representation with the investee company.

c) Escalation though voting: There can be investee companies where the management is not accessible or not accessible at appropriate levels or cases where the IC believes that there is no incremental information which is being provided by the management. In such cases, it is possible that the monitoring is through other sources including participation in AGM/Voting on shareholders’ resolution(s) or engagement through external agencies. The Firm will maintain internal notes/minutes/other records for each intervention.

Principle 5

The Firm has designed a clear policy on voting and disclosure of voting activity.

The Firm has formulated a policy and process for exercising voting rights and the same shall be followed / adhered so the voting in Investee Company is taken care. Voting Policy is given in Annexure A.

Principle 6

The Firm reports periodically on their stewardship activities.

The Firm will make periodical disclosures to investors (on its website as well disclosure in annual report of the schemes) on discharge of its stewardship responsibilities. This includes the following:

  1. The Firm will report on each principle annually. Voting will be reported on a periodic basis.
  2. Implementation of conflict-of-interest policy
  3. Any updating in this Stewardship Code will be disclosed on the website.

Annexure A

Colossa Ventures LLP

VOTING POLICY:

1.PHILOSOPHY

Colossa Ventures LLP (“The Firm”) has set out this Voting policy. The Policy contains the principles that form the basis of all votes. The Firm believes that these principles are essential to ensure the long-term performance of the schemes managed by the Firm. The Firm will endeavor to manage voting rights with the same level of care and skill as it manages the schemes. As a broad principle, the Firm does not have any intention to participate directly or indirectly in the management of the companies, but it will use its influence as a representative of the investors by exercising its voting rights in accordance with the best interests of its schemes’ investors. The schemes are entitled to exercise the voting rights attached to the shares. The shareholders do not necessarily need to be physically present at the site of the company's annual meeting / extra-ordinary general meeting in order to exercise their right to vote. It is common for shareholders to voice their vote by proxy.

2. PRINCIPLES OF VOTING

In terms of relevant guidelines issued by SEBI from time to time in this regard, a general voting policy is framed for exercising the voting rights vested in the Firm as an Investment Manager through Trustees.

a) Voting is completely discretionary.

b) The Firm exercises proxy voting in respect of the following matters: -

  • Corporate governance matters, including changes in the state of incorporation, merger and acquisition and other corporate restructuring, and anti-takeover provisions.
  • Changes to capital structure, including increases and decreases of capital and preferred stock issuances.
  • Changes to governance policies of the company.
  • Stock option plans and other management compensation issues.
  • Social and corporate responsibility issues.
  • Appointment and Removal of Directors.
  • Any other issue that may affect the interest of the shareholders in general and interest of the unitholders in particular.

3.MECHANISM

The Firm exercises voting responsibilities for the investee companies through electronic means. The mechanism may also include physically attending the meetings. The Firm intends to exercise its votes in the best of interest of funds as unit holders. However, the Firm, at no point in time intends to participate directly or indirectly in the management of the companies.

The Committees will have the final authority to decide upon exercise of votes. The Committees will meet at periodic intervals as and when required to consider any changes to the voting policy. The Committees may obtain recommendations/ feedback/ opinion/ views from Fund Managers, Research Analysts or such other persons as may be felt necessary.

The Firm may also decide to subscribe to services offered by an unaffiliated third-party research firm, to receive analyses and recommendations on the shareholder meetings of companies/ corporations. These analyses will be reviewed and studied before taking a final voting decision.

4.CONFLICT OF INTEREST

All decisions pertaining

a) The Firm will exercise adequate safeguards to address any conflicts of interest with regard to any individual investments including where investments are in the group companies of the Firm. The Firm will only be voting in the exclusive interest of the investors, without taking into consideration the interest of any particular lobby/business group / promoter etc. of such company.

b) The Committees may also take an external opinion or refer the matter to the Board of Partners of the Firm.

5.INTERNAL REVIEW & CONTROLS:

Particulars Responsibility
Ownership of the Voting Policy IC, if any or the Key Investment Team (“KIT”)
Evaluation of Voting Proposals and Decision Making on Proxy Voting IC, if any or the KIT but may refer certain issue / matter to the Board of Designated Partners of the Firm, where deemed necessary by the IC/KIT.

The Firm may engage independent proxy advisers to evaluate proxy voting proposal.

6.DISLOSURES

This policy will be uploaded on the website of the Firm (www.colossaventures.com) In accordance with the regulatory guidelines, the Firm will make following disclosures to the unitholders.

a) Voting exercised along with the rationale supporting their voting decisions shall be disclosed on a periodic basis.

b) A summary of the voting exercised across all the investee companies shall be disclosed with respect to the voting decisions taken for the schemes of the Firm.

c) The Firm shall disclose the proxy voting exercised on an annual basis in the Annual Report of the Schemes of the Firm.

d) The above disclosures may be sent to investors along with annual report or separately as annual intimation.