Proxy advisory firms support Vedanta's move to transfer Rs 12,587 crore from reserves.

Glass Lewis supports Vedanta Ltds plan to reorganise capital and relocate Rs 12,587 crore from general reserves to retained earnings . Glass Lewis: Sale was in the best interest of all parties involved .

NEW DELHI: Glass Lewis, a US-based proxy advisory firm, has supported Vedanta Ltds plan to reorganise capital and relocate Rs 12,587 crore from general reserves to retained earnings.On October 11, Vedanta's shareholders met to discuss a proposed arrangement.Vedanta explained to shareholders that the company had built up significant reserves over the years through cash transfer.The company believes that the general reserves' funds are insufficient to meet the company's anticipated operational and business needs in the near future, and that these excess funds can be used to create more shareholder value, according to the organization.

The move effectively frees up cash reserves and allows businesses to reward shareholders.Glass Lewis said in its analysis on the subject that it believes that management of the business and the board of directors are best left to management and the board, not for any outrageous or illegal conduct that could jeopardize shareholder value.When re-election is planned, board members should be held accountable, it said.The plan was then declared to have no economic impact on the company's shareholders, according to the group.

This isn't the first time a transfer is made.HUL performed the same as it transferred the entire balance in its general reserves of Rs 2,187 crore to its profit and loss (P&L) account on April 1, 2015.Changes in the Companies Act, 2013 enabled the transfer of funds from general reserves to the P&L account.Before the declaration of dividends, the companies were required to transfer a certain amount of revenue to their general reserves.