ABSTRACT

Shareholder activism has emerged as a crucial mechanism for corporate governance, influencing board decisions and enhancing accountability in the USA and India. In the United States, shareholder activism gained momentum in the late 20th century, with hedge funds and institutional investors playing a significant role in shaping corporate policies. Judicial pronouncements, such as Business Roundtable v. SEC and AFSCME v. AIG, have clarified shareholder rights, reinforcing their influence on corporate decision-making. Events like the shareholder revolts at Apple and ExxonMobil further highlight the growing assertiveness of investors in corporate affairs. In India, shareholder activism has evolved gradually, driven by regulatory reforms and judicial interpretations under the Companies Act, 2013, and the Securities and Exchange Board of India (SEBI). Cases like Tata Sons v. Cyrus Mistry underscore the increasing role of minority shareholders in challenging corporate misconduct. Indian courts and regulatory bodies have upheld shareholder rights, fostering transparency and accountability. While the USA has a long history of shareholder activism backed by legal precedents, India is witnessing a rising trend, with courts playing a pivotal role in balancing corporate interests and shareholder rights. The comparative analysis of both jurisdictions highlights the growing legal recognition of shareholder activism as a cornerstone of corporate governance.

I.               STATE LAW

Each company gets its incorporation in the state of its choice. In the U.S. the law within the realms of states established the fiduciaries duties of Directors. Also the powers and authority of the same is also governed by the states laws. This duty, power and authority of the before said at the instance of the state legislature holds good not only to privately held companies but also to publicly traded companies. As already discussed more than half of the Public Companies in the United States of America are formed in a single state by the name Delaware. Delaware is a small state but since it has got specialized in the field of business law and also together developed a sophisticate judiciary, as a result it has given a body of good number of case laws.

II.             FEDERAL LAW

For the purpose our research, the federal laws are to be more focused on because the same are related to shareholders’ activism and engagements. The one governing securities trading like the Securities Act of 1933, the Security Exchange Act of 1934, the Sarbanes Oxley Act 2002, and the Dodd Frank Act of 2010 are the example of federal laws which have given rise to shareholders’ activism. The federal laws particularly the one relating to the protection of competition also has a significant impact on activism.