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Rise of Shareholders Activism in India

Authors: Sudam Shrikrushna Shingade, Samaksh Rastogi, Shailesh Rastogi

Journal: TEST Engineering & Management

Publication date: 2020 May/June

Publisher: TEST Engineering & Management

URL: click here


Abstract:

Shareholders’ Activism is on rise in India. As per our earlier paper we have found limited literature on Shareholders activism in India. We tried finding out various issues raised globally by the activist shareholders in our second paper which are broadly categorised in Idle Cash related issues, Financial Performance and Valuation related issues, Executive/Senior Management related issues and Board of directors’ related issues. We tried understanding where activism in India stands and mapped the issues raised by the activist in India. For this purpose, we chose resolutions which were rejected by the shareholder’s in last three financials years (starting from FY2017 to FY2019). As per our study most of the cases falls under Board of directors’ related issues followed by Executive/Senior Management related issues. Related party transaction (miscellaneous issues) is found to be the key issue in these cases. We found only one resolution rejected for Financial Performance and Valuation related issue. As India is going through regulatory transformation along with increased institutional stake in Indian corporates, we expect rejection to increase Multifood going forward. This again depends on how effectively regulations gets implemented and executed.