Shareholder activism is an essential check on promoter-dominated corporate governance in India. Examine its historical roots and present-day legal framework.

Shareholder activism means investors using their votes, the general meeting and legal remedies to make management answer to them. Promoter families control many Indian boards. For their minority shareholders, activism is the first line of defence, and Indian case law shows it at work a century ago.

Historical roots

• 1926 TISCO case: A shareholder, P.D. Shamdasani, prosecuted seven directors and Tata Sons for failing to hold the AGM within 15 months, as the Indian Companies Act required. Each was fined Rs. 5 [1].
• Minority leverage: One small investor held a powerful promoter group to account. He did it with a clear, dated procedural duty, which is far easier to prove than "mismanagement" [1].
• Limits: The only route was a criminal court, and the penalty was nominal. The law could be enforced, but it did not deter [1].

Present-day legal framework

• Companies Act, 2013: Section 96 keeps the 15-month cap between AGMs [2], so the accountability forum Shamdasani defended still exists.
• From crime to civil penalty: A 2018 committee moved 16 of 81 compoundable offences to in-house e-adjudication [3]. The Company Law Committee, 2019 proposed moving 23 more [4]. The Companies (Amendment) Act, 2020 removed imprisonment for several defaults [5]. Penalties are now quicker and no longer need long criminal trials.
• Board-level safeguards: The Kotak Committee (SEBI, 2017) recommended at least six directors per listed board, including one independent woman director [6]. SEBI accepted most of its proposals with changes [7].
• "Majority of minority" voting: Royalty or brand payments to promoters above a threshold need approval from shareholders outside the promoter group [8]. This targets exactly the conflict between promoter and minority seen in the TISCO case.

Persisting gaps

• Large promoters may treat civil penalties as a cost of doing business. When the 2020 Bill was introduced, some MPs asked that it first be examined by a Standing Committee [5].
• SEBI rejected some Kotak proposals because they conflicted with the Companies Act [7], so reform stops at the parent law.
• Activism still depends on minority shareholders being informed and organised.

Indian shareholder activism has moved from one man's criminal complaint to safeguards built into boards and voting rules. The way forward is to keep penalties high enough to deter, publish adjudication orders, and keep criminal prosecution for wilful or repeated default. That would make activism a real check on promoter dominance and support SDG-16's goal of accountable institutions.