Institutional Shareholder Services, one of the dominant proxy advisory services, is up for sale by parent company MSCI Inc.

On Thursday, the board of directors for MSCI, a public company traded on the New York Stock Exchange, authorized the “exploration of strategic alternatives” regarding ISS. The announcement triggers the start of a process that may eventually lead to a full separation of ISS from MSCI, global provider of investment decision support tools.

A statement announcing the move cautions that it is a preliminary step, with no imminent buyer as yet. “There can be no assurance that the process of exploring strategic alternatives will result in a transaction or that any transaction will ultimately be consummated,” it said. “ISS does not expect MSCI to disclose further developments with respect to the process unless and until a definitive decision is reached with respect to a specific transaction or the process of exploration is otherwise terminated or concluded.”

Throughout the process, Morgan Stanley is serving as a financial advisor; the law firm Davis Polk will serve as legal advisor.

ISS, founded in 1985 as Institutional Shareholder Services Inc., is based in Maryland and has more than 1,700 clients for its corporate governance services. MSCI bought ISS in 2010.

The possibility of a sale comes amid growing scrutiny of ISS and rival Glass Lewis, both in the U.S. and abroad, over the methodologies they use to offer guidance on such matters as executive pay and shareholder resolutions. Both have also fought back against charges that their advice could be compromised because of inherent conflicts of interest that arise from their consulting arms and parent companies. ISS and Glass Lewis control approximately 97 percent of the market for proxy advisory services

Last month, citing concerns that proxy advisory firms “not only increase the costs of being a public company, but also create disincentives for companies to become public in the first place,” Nasdaq OMX Group petitioned the Securities and Exchange Commission for new disclosure and transparency demands on how those firms formulate their recommendations.

The petition requests that the SEC revise guidance issued nearly ten years ago and demand disclosure of the models, formulas and methodologies used to make recommendations on how shareholders should vote. Disclosure is also urged for “all relationships that may give rise to conflicts of interest.”

In July 2010, the SEC published the Concept Release on the U.S. Proxy System, which raised a number of questions about the current role of advisory firms. Earlier this year, the European Securities and Markets Authority, after seeking comment on the proxy advisory industry, issued a report in which it called for a code of conduct for the proxy advisory industry. The Canadian Securities Administrators, an umbrella group of Canada's securities regulators, recently announced that it expects to propose a regulatory approach to proxy advisory firms in early 2014.