Shareholder Activism and its Impact on Corporate Governance in India: A Critical Analysis

Shareholder activism is defined as the use of shareholder rights to achieve a change in behavior by corporations. This practice originated from the United States and the United Kingdom and is gradually gaining traction in India due to the implementation of liberalization policies in 1991, the development of an effective regulatory regime for securities, and the increased confidence of institutional investors. The primary objective of the current study is to examine the environment in which shareholder activism takes place in India by making reference to the relevant regulations like the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the SEBI Stewardship Code, 2020. This paper employs the doctrinal research method, supplemented by case studies such as the Tata-Mistry dispute, the Infosys whistleblower episode, the mismanagement at Fortis Healthcare, and the problems at Yes Bank. It can be argued that although shareholder activism is a very effective form of corporate governance, certain structural barriers exist and restrict its potential. These include the prevalence of promoter-led ownership, lack of awareness among retail investors, as well as the infancy of class-action litigation.