ABSTRACT

Shareholders’ activism has emerged as a dynamic force in corporate governance, particularly in the United States and India, where it has significantly influenced boardroom decisions and corporate policies. In the U.S., activism has evolved since the 1980s with the rise of institutional investors, hedge funds, and proxy battles, reinforced by judicial decisions that have upheld shareholder rights and encouraged corporate transparency. Landmark cases such as Dodge v. Ford Motor Co. and SEC v. Texas Gulf Sulphur Co. laid the groundwork for recognizing shareholder interests and the importance of timely disclosures. In India, shareholder activism is relatively nascent but has gained momentum due to reforms in corporate law, the emergence of institutional investors, and growing awareness among retail investors. Judicial pronouncements such as Tata v. Mistry and regulatory actions by SEBI have contributed to empowering shareholders and fostering a culture of accountability. Events like the Satyam scandal also catalyzed a shift toward stronger governance mechanisms. This comparative analysis reveals that while the U.S. model is driven by market forces and judicial backing, India is increasingly catching up through legal reforms and active judicial intervention. Together, these developments underscore the vital role of courts and landmark events in shaping the trajectory of shareholders’ activism in both jurisdictions.

INTRODUCTION

The overall health condition, i.e., all round development of an institution, group or association can be deciphered from the fact that how much right and privilege is enjoyed by the person at the hind side, ,i.e., how much enjoyment of the right is available or remediable to the person who is weakest, since the main purpose of law is to protect the weaker section as the well versed ones as they themselves are capable of insuring the enforcement of their rights. In the corporate world also the corporate governance shall remain incomplete without ensuring the rights of the minority shareholders. If the minorities shareholders have say in most of the significant decisions of the company, it’s very much a manifestation of good health of the company and if the minority shareholders themselves peruse for the enforcement of their rights, it adds value to the feature of corporate governance.

Not only in the past or present rather in the coming[1] days also shareholders’ activism seems to be a promising feature of the corporate arena in the United States. This continued significance of the same has been due to a past famous serious of scandals during the early period of 2000s and the most memorable among them all was of Enron Corporation. It followed war level efforts in the field of U.S corporate governance. Famous among the reforms particularly the later introduced federal regulations primarily focusing on corporate governance have significantly altered the features of the board of directors in U.S. corporations. Not only this, the engagement of the shareholders has become a ray of hope for companies. It has also significantly influenced some other legal and cultural alteration and amendments further increasing the power of shareholders.

 In today’s time it is also decipherable that shareholders also have desire to make hand in hand cooperation with the management and board of directors, so that reforms can be brought in the governance of the company further touching other aspects also. This role of present day shareholders activity has in a way melted the thaw between a traditional shareholder activist and other shareholders of a corporation. This is due the fact that, now days an increased expectation; seeking to impose more influence upon the governance and the decisions which may have a substantial effect upon the company; can be seen to have been well discharged by a shareholder.

Though the term activist has seen itself effectively getting diluted due to the fact of a number of kinds of shareholders emanating the solution, then also the always increasing acceptability of activism in the field of corporate arena has continued to increase the frequency of the same. This is manifest from the fact that a number of giant U.S. Corporations, i.e., U.S. Public Companies, which time and again face the public activist demand, are day by day getting more and more pronounced then the time which has ever happened in the past and it is also worthy to be noted that the same has increased in terms of publicly announced campaigns.

[1] The Shareholder rights and activism review edition 4, UNITED STATES available on https://thelawreviews.co.uk/edition/the-shareholder-rights-and-activism-review-edition-4/1197515/united-states visited on 21st 2020.