INDIA Law and Practice Contributed by: C R Dua, Sanjeev Kaul, Abhinav Rastogi and Ashish Malkotia, Dua Associates
11.2 Aims of Shareholder Activism Activist shareholders have become more involved and vocal. They undertake a pivotal and proactive role and leverage their rights to influence the company’s inter- nal and external matters. Activist shareholders usually focus on: • opposing excessive promoter influence and ensur- ing good corporate governance, creating trans- parency with regards to the management of the company or changes in the internal structure of the company due to poor management by the board; • promoting change in policies governing ESG; • ensuring the protection of shareholders’ interests and rights; • financial issues, such as cost-cutting, increasing shareholder value, capital inefficiency and under- performance; and • addressing the problem where the management does not adequately respond to shareholders’ concerns. 11.3 Shareholder Activist Strategies Activist shareholders commonly employ various strat- egies to protect their interests, influence or strengthen corporate governance policies, and bring transpar- ency to the company’s affairs. To pursue such an agenda, activist shareholders employ the following strategies: • consistent interaction with the board to ensure transparency, giving strategic advice, and actively participating through a stakeholders’ relationship committee; • requesting the board to convene a general meeting to discuss a particular agenda; • organising campaigns or making public announce- ments of their opinion on a particular matter pro- posed to be transacted at a meeting or after such matter has been passed; • using legal remedies such as approaching the Tribunal on the grounds of company affairs being conducted in a manner that is prejudicial to the company and its shareholders or initiating a class action suit; and • filing a complaint with the SEBI on the grounds of a breach of governance norms as prescribed for listed companies.
Activist shareholders do not need to acquire a large shareholding in the target company; even with a small stake, they may pursue their agenda by seeking other
shareholders’ support. 11.4 Recent Trends
In India, shareholder activism is a recent phenomenon that is not specific to any industry or sector. Of late, institutional investors have targeted or taken an inter- est in promoter-driven companies and recently listed companies, addressing issues such as: • succession; • governance issues; • enhanced remuneration proposals for promoter directors; • related party transactions; • the induction of independent directors; and • the alteration of articles proposing to give more management control and powers to the promoters. Some examples of companies targeted by such activ- ists in the recent past include Zee TV, Dish TV, FSN E-Commerce Ventures Ltd (Nykaa), Sun TV, Zomato, Eicher and Burger King. A class action suit was filed against Jindal Poly Films, accusing the company of selling preference shares to a promoter entity at depressed valuations, causing a loss to minority shareholders. Investors of edtech company BYJU’s also filed a case of oppression and mismanagement before the Tribunal and sought its founding director’s removal. Furthermore, certain shareholders of ICICI Securities attempted a class action lawsuit against the company’s delisting and merger plan with ICICI Bank. More recently, in July 2025, Zee Entertainment’s pro- posal to issue preferential warrants of INR22.37 billion to entities linked to the promoter family was rejected after it secured only 59.5% shareholder approval, against the required 75% threshold. Few institutional investors and proxy advisory firms opposed the plan, citing (inter alia) concerns of dilution. This rejection fol- lowed Zee’s failed merger with Sony and earlier share- holder resistance to re-appointment of the promoter’s representative as a director in 2024.
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