₹11 lakh crore in assets. One shared objection.

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Mutual funds managing over ₹11 lakh crore in assets keep voting no on the same kind of board appointment. The nominees aren't unqualified. Nobody disclosed who they actually were.

The Pattern

Over the past several months, a growing bloc of Indian mutual funds — including Axis, UTI, DSP, Sundaram, and Union Mutual Fund — has been voting against the appointment of "Politically Exposed Persons," or PEPs, to the boards of listed public sector undertakings. In a single quarter, more than a dozen director-level appointments drew negative votes from this group.

Their stated objection isn't that these nominees lack qualifications. It's that appointing politically affiliated individuals to a corporate board "unnecessarily politicizes the decisions of the corporation and distracts management from its core focus" — and, more pointedly, that PSUs often don't disclose the political backgrounds of these nominees in the very resolutions shareholders are asked to vote on. The information a shareholder would need to actually evaluate the appointment simply isn't part of the appointment.

It's not a unanimous position. Some of India's largest fund houses — HDFC, SBI, ICICI Prudential, Kotak Mahindra, and Nippon India among them — have voted the other way, supporting these same appointments. This isn't a settled scandal. It's a live disagreement about what a board appointment process should actually have to disclose before anyone votes on it.

Why "Politically Exposed" Is a Real Category, Not a Vague Label

A Politically Exposed Person isn't an informal accusation — it's a defined term in global due diligence and anti-money-laundering standards, referring to someone who holds or has held a prominent public position, or who has close personal or professional ties to someone who does. The reason it's a defined category at all is that political proximity creates a specific, well-documented kind of governance risk: conflicts of interest, undisclosed influence, and decisions that serve something other than the organization's stated interest.

This isn't a new type of risk to this newsletter, either. When we covered the Big Four consulting firm's CXO due diligence case, the discovery that broke the appointment wasn't the kickbacks alone — it was a property record showing an undisclosed asset transfer to a politically influential figure. Same category of risk, different setting. A PEP check isn't a bureaucratic formality. It's specifically designed to catch the version of "everything looked fine until someone checked who this person is actually connected to."

The Fix

The problem here isn't that PSUs are appointing bad people. It's that the appointment process doesn't require disclosing the one category of information that would let anyone — shareholders, boards, regulators — actually evaluate the risk before voting. A resolution that omits a nominee's political exposure isn't neutral. It's a resolution that's asking for approval without giving anyone the information needed to withhold it.

This is exactly why political exposure checks are a standard, named component of real senior-level due diligence — alongside litigation history, conflict-of-interest indicators, and adverse media review — rather than something investors have to demand after the fact through a proxy vote. Disclosure at the point of appointment is cheaper, faster, and far less contentious than a governance fight months into someone's board tenure.

PEP screening is one of the standard checks a structured due diligence partner like Millow.io runs as part of senior appointment and board-level due diligence — precisely so this information exists before an appointment goes to a vote, not after someone's already raised a hand to object.

Has your organization ever had to push for disclosure that should have been there from the start? Reply and tell us.

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Written by the team at Millow.io — see what a background check catches before you make your next hire.