ARCHIVES
VOL. 10, ISSUE 3 (2024)
The existence of shareholder activism in India: A factual occurrence or a deceptive perception?
Authors
Susmita Biswas, Subhajit Chakraborty
Abstract
The traditional governance of companies globally has revolved around
majority rule, wherein the power to make binding decisions for the entire
company rests with the majority shareholders. This principle gained legal
validation through the English case of Foss v. Harbottle, establishing a norm
of judicial non-interference in corporate affairs if the majority's decision
prevails. This norm prevailed for decades and shaped corporate governance
practices. In India, the concentration of ownership and control in companies
has posed significant challenges for activist shareholders. The dominance of
business families in controlled companies or government entities in public sector
undertakings has hindered the ability of minority shareholders to challenge or
influence the functioning of these entities. However, the regulatory
developments such as the Companies Act, 2013, and regulations introduced by the
Securities and Exchange Board of India have provided momentum to empower
minority shareholders. Implementation of the Kotak Committee's recommendations
and the regulation of Proxy Advisory firms reflect ongoing government
interventions aimed at promoting shareholder activism in India. This paper aims
to analyze the legal framework of shareholders' rights in India, its impact on
shareholder activism, and the necessary statutory and regulatory measures to
strengthen it. The paper also delves into emerging trends in shareholder activism
in India and prospects for further advancement in this movement. It includes
analysis of three key cases related to shareholder rights and corporate
governance to assess the potential avenues for activism. In conclusion, the
paper presents recommendations to enhance shareholder activism in India,
considering the evolving legal landscape and regulatory environment.
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Pages:233-238
How to cite this article:
Susmita Biswas, Subhajit Chakraborty "The existence of shareholder activism in India: A factual occurrence or a deceptive perception?". International Journal of Law, Vol 10, Issue 3, 2024, Pages 233-238
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