Shareholder Activism in India

Shareholder Activism


The shareholder activism in India can be tracked down in the year of early 2010 when there was a mandatory requirement done by SEBI related to the disclosing of voting policies related to domestic Mutual Funds as well as voting actions on an annual basis.[1] In the year of 2010, India started its first proxy and advisory services company.[2]

There were voting recommendations which were offered to the proxy advisory firm related to the institutional investors Life Mutual Funds, Foreign Institutional Investors, Insurance Companies, Private Wealth Management Firms, etc on the shareholder meeting resolutions of the companies. The Indian Institutional Investors were concerned with the non-routine actions of mergers and acquisitions.[3]


There were many cases under which proxy advisory firms have found many issues related to the company proposals.[4] The first case of institutional activism was in the case of Akzo-Noble Merger case in early 2012 and then the Sea-Sterlite merger case in mid 2012.[5] “In the Akzo Nobel case, the Board proposed to merge three promoter-held unlisted entities with Akzo Nobel at seemingly high valuations. In Govern issued recommendations against the proposal based on which a few prominent domestic institutions voted against the merger. However, the merger went through as it received sufficient percentage of votes”.[6]

In the case of Sea-Sterlite the boards of Sea Goa and Sterlite approved of two companies along with the Vedanta Aluminium Limited. The Proxy firms highlighted that that the Vedanta Aluminium limited has the number of Human Rights issues.[7]


Mr. Shapoor Mistry was classified as an independent director of the Indian hotels which was owned by Tata Group in its annual report of 2012.[8] This classification turned out to be wrong since Mr Shapoor Mistry belong to the family of Tata sons and holds the major shareholding in the Tata sons and is the brother of Mr Cyrus Mistry. The investors raised the issue regarding this and due to which Mr. Shapoor Mistry was classified as non independent director in the annual report of 2013. The resolution in 2012 was proposed by Jindal Steel and power and authority to CMD for setting up the remuneration of the executive directors.[9] In this case also due to the proxy forms and shareholders the Company withdrew the proposal.[10]


In the year 2014, Tata Motor proposed the payment of Remuneration to its two Executive directors and the Managing directors which was rejected by the public shareholders.[11] That was the first time when a proposal which was made by prominent company lead to failing in the approval by shareholders.[12] Similarly in the year of 2014 the proposals which were made by United Spirits to enter into related party transactions were rejected by its shareholders.

There was another case in which Siemens decided to sell its metal Technologies to the German patent company which was rejected by its shareholders. All these three companies re-propose day resolutions which enhanced the disclosure and explanation.[13]


The proxy advisory firms act not only the one who takes the stand on activism but also the foreign investors also started taking an interest in their Indian investee companies. In the Year 2014, Knight Assets which is UK based fund starting and ending with Tata Motors to list the A shares in the American bourses.[14]


Share holder activism can only take place where the minority shareholder interest are protected under the Companies Act, 2013 Clause 49 of the listing agreement and other regulatory changes which are made by SEBI has made many changes to enhance corporate governance landscape in India.[15] There is requirement for a greater degree of disclosure by the companies which are added to shareholders for analysing the particular actions and making better informed decisions.[16] E-voting became mandatory which lead to greater investor participation as a voting process and independent location of the investor.[17]

There were the provisions like class action suits against the company and their directors which were also uplifted and build up the confidence of the minority investors to raise the voice against the companies whenever there is something which is unnecessary is arising.[18]


[1] Khushboo Narayan, The advent of shareholder activism in India (2014), (last visited Jun 25, 2017).

[2] Shareholder Activism in India, , (last visited Jun 25, 2017).

[3] Iragavarapu Sridhar, Corporate Governance and Shareholder Activism in India—Theoretical PerspectiveCorporate Governance and Shareholder Activism in India—Theoretical Perspective, (last visited Jun 25, 2017).

[4] Shivam Dubey, Shareholders activism in India (2015), (last visited Jun 25, 2017).

[5] Cyril Shroff , Corporate Governance & Shareholder Activism (2016), (last visited Jun 25, 2017).

[6] Id.

[7] Shareholder activism in India highest in Asia, says report, (2014), (last visited Jun 25, 2017).

[8] Amy Kazmin, Indian companies facing wave of shareholder activism, (last visited Jun 25, 2017).

[9] Shareholder Activism – What is?, (2015), (last visited Jun 25, 2017).

[10] SATATYA ANAND , SHAREHOLDER ACTIVISM IN INDIA , (last visited Jun 25, 2017).

[11] Case-Study Evidence of Shareholder Activism, (2016), (last visited Jun 25, 2017).

[12] Shareholder activism in India highest in Asia, says report, (2014), (last visited Jun 25, 2017).

[13] Amrit Singh Deo, Shareholder Activism: Is India Inc. Prepared?, (last visited Jun 25, 2017).

[14] Cyril Shroff , Corporate Governance & Shareholder Activism (2016), (last visited Jun 25, 2017).

[15] Umakanth Varottil, The Advent of Shareholder Activism in India, 1 Journal on Governance (2012), (last visited Jun 25, 2017).

[16] Natasha Malpani, Coal India faces a surprising case of shareholder activism in India (2012), (last visited Jun 25, 2017).

[17] INDRAJIT BASU, Indian investors gain clout — and they’re not afraid to use it (2014), (last visited Jun 25, 2017).

[18] Rise Of Corp Governance & Shareholder Activism In India, (2014), (last visited Jun 25, 2017).

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