Shareholder activism in India

Abstract

An activist shareholder is one using an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial (increase of shareholder value through changes in corporate policy, financing structure, cost cutting, etc.) to non-financial (disinvestment from particular countries, adoption of environmentally friendly policies, etc.). The attraction of shareholder activism lies in its comparative cheapness; a fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign. In this CCS, we attempt to study the phenomena of shareholder activism from an India perspective. Although there have been very few cases of Activist Campaigns in India, we use the level of Corporate Governance activity as a proxy to quantitatively and qualitatively analyze Investor Activism in Indian companies. In particular we look at how different classes of shareholders act during routine corporate governance meetings like AGMs. We also look at existing literature in the area India and elsewhere, to identify trend of activist shareholder and their impact on the company.