Divergent Stewardship in India: A Regulatory Blind Spot

India’s SEBI Stewardship Code mandates institutional investors, such as Asset Management Companies and Alternative Investment Funds, to actively monitor and engage with investee companies to promote long-term value creation and corporate governance. However, the Code’s silence on threshold limits for triggering stewardship responsibilities has created significant regulatory ambiguity. This article presents original empirical findings from an analysis of stewardship policies of 27 major AMCs in India as of September 2025, revealing a wide divergence in threshold-based engagement practices. AMCs have adopted quantitative, qualitative, and hybrid approaches, with thresholds ranging from 2 to 5 percent of AUM or paid- up capital, effectively limiting active oversight of several investee companies. This divergence constitutes regulatory arbitrage, weakening minority shareholder protection and diluting the Code’s intent. The article recommends that SEBI standardize stewardship thresholds, mandate transparent disclosure, and issue clear regulatory directives to ensure uniform and meaningful institutional engagement across the industry.

Siddharth Singh, Hemant Tewari