The Shareholder Rights and Activism Review: India

Overview

Historically, certain particular features of the Indian market have affected shareholder activism. First, there has been little separation of ownership and management. Many Indian listed companies are controlled by 'promoters' (i.e., their original founders) and the interests of the public shareholders have often been subordinated to those of the promoters. Second, until recently, hostile takeovers have been rare, and promoters have previously operated with little fear of a non-consensual change of control. Third, the institutional investor base in India is not as organised as in the United States or the United Kingdom and has traditionally been passive.

However, over the past decade, legislative and regulatory changes have improved corporate governance standards, enhanced minority shareholder rights, created new shareholder remedies, codified directors' duties and encouraged greater institutional shareholder engagement. Also, proxy firms are now active in the Indian market and investors have become more adept at using the media. These changes have coincided with other market developments. First, succession issues and over-leveraged balance sheets have made promoters and professional management of certain listed companies vulnerable. Second, the high levels of investment in listed Indian companies by international financial investors has led to greater accountability. Third, there have been two recent contested public M&A transactions. Finally, some international activist investors have taken positions in Indian listed companies. These dynamics have even affected companies with a better governance history and have led to the rise of shareholder activism in India.

Although activism in India is at earlier stage of evolution in comparison with the United States, Indian promoters can no longer take their shareholders for granted.

Legal and regulatory framework

i The ability of shareholders to appoint and remove directors

In India, directors of public companies are appointed by shareholders, just as they are in many other common law jurisdictions. However, there is no mandatory annual re-election requirement for directors of public companies (whether listed or otherwise). Independent directors are appointed for a term of up to five years,2 and at least two thirds of all non-independent directors are subject to rotational retirement and re-election (unless the articles require this for all the non-independent directors).3 This contrasts with the position in England and Wales, where the requirement under the UK Corporate Governance Code on a 'comply or explain' basis for all FTSE 350-listed companies to annually reappoint directors serves as a powerful governance tool to keep directors in check. However, there have been recent instances where investors have been more active with regard to the appointment and removal of directors of listed companies (see Section IV iii).

An investor can also theoretically seek board representation as a 'small shareholder' by acquiring a small number of shares and then petitioning the company with the support of the lower of 1,000 other small shareholders or 10 per cent of the total number of small shareholders.4 However, this has been hard to achieve in practice. For instance, in August 2017, Unifi Capital failed in its attempt to appoint a small shareholder director on the board of Alembic5 (the small shareholders were allegedly clients of Unifi Capital), and in 2021 the Supreme Court ruled that an 18.37 per cent shareholder could not use this provision to gain board representation.6

The removal of a director prior to expiry of his or her term requires an ordinary shareholders' resolution (i.e., approval by a simple majority), and the director must first have been given an opportunity to be heard.7 In May 2018, institutional investors and certain funds removed a director of Fortis Healthcare in this manner (see Section IV). This is the first example of an activist campaign leading to changes on the board.

Also, the removal of non-statutory responsibilities or designations conferred upon directors does not require shareholder approval. For instance, as discussed further in Section II.vi, the articles of Tata Sons did not require shareholder approval for the removal of Cyrus Mistry from his role as chair of the board (although the removal of his directorship required shareholder approval).

ii Control over executive remuneration

Shareholders have voted down executive remuneration packages in a number of instances. In 2018, shareholders rejected the compensation of the managing director and promoter of the Apollo Group), leading to a 30 per cent reduction in his compensation, which was subsequently approved. Previously, the executive remuneration resolutions in Tata Motors' annual general meeting in 2014 were rejected, and in 2011 Seamac and ARSS Infrastructure in 2011 withdrew their executive compensation resolutions.8 In 2017, Infosys, a leading IT company, was criticised by its founders for the levels of severance payments made to exiting executives (see Section IV).9

Also, the alignment of incentives and compensation in financial institutions is now an area of regulatory focus. In November 2019, the Reserve Bank of India published guidelines governing compensation in private sector banks, including requirements to balance fixed and variable compensation, and have introduced clawback provisions, and there is one example of a private bank (ICICI Bank) seeking to claw back past compensation from a former CEO following allegations of wrongdoing.

iii The ability to requisition shareholders' meetings and postal ballots

Shareholders holding at least one-tenth of voting paid-up share capital can notify the board to requisition an extraordinary general meeting (EGM),10 and if the board does not call the EGM within 21 days of the requisition notice, the shareholders may themselves call the EGM (to be held within three months).11 If the directors fail to convene an EGM following a valid requisition notice, they become liable for any requisition-related expenses.12

Indian company law does not expressly provide shareholders the ability to pass written resolutions, but there are provisions permitting postal ballots.13 In 2017, a public shareholder sought appointment as a non-executive director unsuccessfully through electronic voting (see Section IV.iv).

iv Shareholders' influence over corporate strategy

Under Indian company law, directors are delegated the authority to manage company affairs, subject to the satisfaction of their duties. Public campaigns to encourage a change of strategic direction have so far been uncommon, but shareholders do have certain powers to keep management and promoters in check.

Although there is no Indian equivalent as comprehensive as the 'class tests' under the UK Listing Authority's Listing Rules, the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (the Listing Regulations) require shareholders' special resolutions (i.e., a 75 per cent approval threshold) for any disposal of a controlling interest in a 'material subsidiary' or any transfer of a significant portion of the subsidiary's assets.

Also, regardless of listing status, as a result of statutory special resolution approval requirements, minority shareholders holding more than 25 per cent of a company's voting power can influence certain key corporate actions such as the issuance of new shares14 on a non-pre-emptive basis (which will affect non-cash consideration in M&A transactions), any transfer of an undertaking by a public company15 (which is the most direct statutory control over M&As) and any borrowing by a public company in excess of that company's paid-up share capital, free reserves and securities premium (which will affect the financing of M&A transactions).16

In addition, qualifying related party transactions require shareholder approval (simple majority) under both company law17 and the Listing Regulations.18

Finally, the Listing Regulations provide for the rights of shareholders to 'participate in, and to be sufficiently informed of, decisions concerning fundamental corporate changes' and a principle requiring the 'protection of minority shareholders from abusive actions by, or in the interest of, controlling shareholdings either directly or indirectly, and effective means of redress'. These principles have not been used by activist shareholders, but boards of listed companies do need to be wary of potential investor complaints to SEBI in the future.

v The position of shareholders and boards in public M&A situations

In theory, Indian law confers considerable power on minority shareholders in public M&A situations. There are restrictions on the board taking frustrating action19 and so defences such as poison pills are difficult to implement. In addition, although there is no formal obligation under Indian takeover regulations to treat shareholders equally in a bid situation, equality of treatment is a guiding principle under the Listing Regulations, and so it would be difficult for a target to provide selective information to certain bidders.20

Also, just as in England and Wales, M&A transactions can be structured through court schemes, which need to be approved by a majority of shareholders holding 75 per cent in value of the shares.21 In contrast with England and Wales, there is no practice of obtaining irrevocable undertakings in the Indian public M&A market, so there is no further segregation of classes of shares (beyond the classes that already exist). Therefore, shareholders holding just over 25 per cent will be able to block a scheme.

Despite the availability of these rights, hostile takeovers have historically been rare. However, 2018 saw a contested public M&A transaction involving Fortis Healthcare, in which shareholders succeeded in removing a director (see Section IV). Further, in 2019, Larsen & Toubro completed a hostile offer for Mindtree.

vi Legal remedies available to shareholders

The Companies Act 2013 (the CA 2013) is perceived as having significantly improved shareholders' legal remedies. Although it is true that new remedies have been created, the lengthy nature of the litigation process in India and the judicial history of enforcing shareholder rights should temper expectations.

Minority shareholders (comprising 100 members, or shareholders holding 10 per cent voting power) can claim relief against oppression and mismanagement under the CA 2013 on the ground that the company's affairs are being conducted in a prejudicial manner. Also, a similar threshold of shareholders can also, in certain circumstances, apply to the National Company Law Tribunal (NCLT) to investigate the company's affairs.22

However, cases under the preceding company law (the CA 1956) indicate that claimants historically found success difficult under the earlier law.23 More recently, the Supreme Court judgment in Tata Consultancy Services Limited v. Cyrus Mistry Limited24 illustrates the challenges with the use of some of these provisions. Following differences between Cyrus Mistry, then executive chair of Tata Sons, and Ratan Tata, the former chair, on 24 October 2016, Cyrus Mistry was removed from the executive chair of Tata Sons through a board resolution and was subsequently removed as a director of Tata Sons pursuant to an EGM held on 6 February 2017. Shareholder resolutions passed at EGMs removed him from the boards of other group companies. Cyrus Mistry challenged his removal, questioned historic corporate actions and the use of affirmative voting rights in the articles of Tata Sons. The NCLT ruled against Cyrus Mistry, but the National Company Appellate Tribunal (NCLAT) ordered his reinstatement. On further appeal, the Supreme Court ruled against Cyrus Mistry and upheld his removal. The Supreme Court acknowledged that the CA 2013 had broadened the scope of oppression and mismanagement regime. However, it cited Cyrus Mistry's involvement in management in previous decisions, his past acceptance of the articles and the fact that Tata Sons is controlled by two charities in concluding that the NCLT was correct in rejecting Cyrus Mistry's assertions.

Also, CA 2013 has introduced a 'class action' concept in Indian company law.25 Shareholders holding a threshold level of shareholding26 can institute class action suits if they believe that the company's management or affairs are being conducted in a manner that is prejudicial to the interests of the company or its shareholders. The NCLT has the power to issue a broad range of directions and can also order damages. This moves Indian company law away from the restraints of the exceptions to the rule in Foss v. Harbottle.27 However, given the state of the litigation process in India, the effectiveness of this remedy remains to be seen.

vii Other issues

Similar to other jurisdictions, shareholders need to be aware of insider dealing concerns when engaging with a listed company, under the SEBI (Prohibition of Insider Trading) Regulations 2015, as well as the SEBI regulations restricting manipulative, fraudulent and unfair dealings in shares.

With regard to 'concert party' issues, the test of 'concertness' under Indian takeover regulations is by reference to a common objective to acquire shares or voting rights in, or control over, a listed target. The use of voting agreements is rare, but shareholders sometimes cooperate on corporate actions requiring shareholder approval (which might also cause concern).

Finally, although companies do not have a general obligation to provide investors with details of specific shareholders' holdings, companies do need to maintain a register of members that is available for inspection.28 As far as listed public companies are concerned, certain significant acquisitions and disposals do need to be reported to the market and there are periodic disclosures of promoter positions. In addition, like other jurisdictions, Indian company law has recently introduced the concept of a register of significant beneficial owners, which shareholders are able to inspect.29

Key trends in shareholder activism

i Succession issues

Succession issues have sometimes led to a form of activism by founders or previous chairs. For instance, in late 2016 and 2017, Infosys, a US and Indian listed IT company with a good governance reputation, faced a period of sustained pressure from its original founder shareholders over the level of severance payments paid to certain departing executives and the US$200 million Panaya acquisition. This led to an investigation by an international law firm (which reportedly exonerated the management team), following which, in July 2017, the board of Infosys indicated its willingness to work with its founders. However, on 18 August 2017, Vishal Sikka, the incumbent CEO, resigned following continued criticism. Similarly, Cyrus Mistry was removed from his role as the executive chair of Tata Sons in 2016 (see Section III.vi). However, HDFC Bank Limited has successfully transitioned its longstanding CEO in 2020, which suggests that the market is maturing.

ii Litigation v. other strategies

Historically, litigation strategies have proved to be less effective. For instance, the litigation strategy employed by the Children's Investment Fund (TCI) against the directors of Coal India for breach of fiduciary duties between 2012 and 2014 did not meet with success. In 2014, TCI withdrew its court claims and sold its Indian holdings. Equally, recent attempts by Cyrus Mistry, the deposed chair of Tata Sons, to seek relief under Sections 241 and 244 of CA 2013 (for oppression and mismanagement) were dismissed by the Supreme Court (see Section II.vi). Similarly, litigation by minority shareholders of Cadbury in relation to the valuation in a minority squeeze-out scheme failed as the court ruled against the minority shareholder group.30 Therefore, sometimes shareholders have elected to settle instead.31

A more effective technique that certain shareholders have used is to register complaints with regulatory authorities. For instance, in July 2019, the shareholders of Bharat Nidhi Limited objected to a share buy-back scheme and asked SEBI to investigate.32

Alternatively, investors sometimes choose to work with the promoters to curb obvious abuses for which there is likely to be greater institutional investor and regulatory support (see Section IV).

iii Proxy firms

Proxy advisory firms are a key constituency, although they are not as influential as in the United States. They are increasingly vocal, for instance, they recommended that shareholders vote against the Tata Motors executive remuneration resolutions in 2014,33 commented on the leave of absence taken by the CEO of ICICI Bank (while allegations of impropriety were investigated) and, in 2019, challenged the management of Sterling Wilson over the failure to repay debt out of its IPO proceeds.

Although they are regulated by SEBI under the SEBI (Research Analysts) Regulation 2014,34 these firms have faced criticism around perceptions of their own conflicts of interest. In August 2020, published guidelines concerning the regulation of proxy firms (following a consultation process in 2019). These guidelines require proxy advisors to formulate and publish voting recommendation policies, disclose conflicts and establish processes to mitigate conflicts, among others. Listed companies have also been given the ability to approach SEBI to investigate any breaches of these guidelines and the code of conduct under the SEBI (Research Analysts) Regulations 2014.

iv Role of the media

Although public campaigns by shareholders seeking strategic changes are uncommon,35 the media has emerged as a key player, for instance, in the engagement that Narayana Murthy, a founder of Infosys, had with its board in 2016 and 2017 (see Section IV.i).

v Greater investor participation

In the past, collective action issues held back shareholder activism, with investors preferring to simply exit their investments. However, regulatory developments have encouraged long-term investors in the Indian market to more actively engage with promoters (see Section IV). For instance, Indian regulated mutual funds are now required by SEBI to vote on resolutions involving their portfolio companies and provide voting reports on a quarterly and annual basis,36 and, in March 2017 the Insurance Regulatory and Development Authority of India published its Stewardship Code concerning investments by insurance companies in listed securities.

Apart from long-only investors, certain funds have sought to take activist positions in various listed companies, seeking board appointments (albeit unsuccessfully) and successfully removing a director (in the case of Fortis Healthcare). In 2019, the asset sale of the Leela Hotels to Brookfield was challenged by ITC, a non-financial investor, and Life Insurance Corporation, a state owned insurer, on the grounds that certain deal participants were related parties and hence could not vote in favour of the sale. This challenge and its subsequent appeal were dismissed, but it does illustrate that the extent of shareholders asserting their rights has now expanded.

Finally, the Indian Finance Minister in July 2019 suggested that SEBI consider a public float threshold of 35 per cent (rather than the current 25 per cent), which would have significantly increased the influence of public shareholders in listed companies. However, this suggestion has not been implemented.

Recent shareholder activism campaigns

i Blocking transactions

There have been a number of instances where shareholders have been able to block transactions adverse to the shareholders' interests.

Since shareholders with an interest in related party transactions cannot vote to approve them, minority shareholders can sometimes be strongly placed. For instance, in 2018, shareholders of Tata Sponge Iron Limited, holding just 3.77 per cent of the votes, were able to defeat the related party approval resolutions for this reason. Also, in July 2017, the shareholders opposed a related party transaction between Raymond Limited and its promoters (involving the sale of an asset at a significant undervalue). More than 97 per cent of the votes cast were against the transaction.37

Similarly, in November 2015, after pressure from its shareholders, Sun Pharma withdrew from a potential US$225 million investment in the United States.38

Finally, in 2016, HDFC Standard Life Insurance Company Limited and Max Life Insurance Company Limited announced a merger to create a new insurer and the deal terms included the payment of a 8.5 billion rupee non-compete fee to one of the promoters. Ultimately, the deal did not complete owing to regulatory concerns, but various proxy firms had strongly opposed this fee.

ii Forcing renegotiation of terms

In certain cases, shareholders have been able to force a renegotiation of terms in large transactions.

In 2014, Maruti Suzuki's proposed manufacturing contract with a shareholder, Suzuki, was criticised for failing to seek shareholder approval for the transaction. Some of the largest funds in India wrote a letter to Maruti Suzuki challenging the proposed transaction. Even Life Insurance Corporation of India, a state-owned insurer, not known for activism, reportedly engaged with the company.39 The transaction terms were modified, and the company ultimately did obtain shareholder approval as a related party transaction matter, in 2015.

Similarly, in August 2014, the shareholders of Siemens India voted down the proposed sale of its metal technologies business to Siemens AG. Siemens India amended the terms of the transaction to increase the sale price40 and finally obtained shareholder approval in December 2014.

In the public M&A context, minority shareholders threatened to challenge a mandatory share swap scheme (announced in December 2019) between Reliance Industries Limited (RIL) and Reliance Retail Limited, on the basis that they had not been provided an exit option. In January 2020, as a result of this opposition, RIL made this scheme optional.

iii Changes to board composition

Investors succeeded in removing a director of Fortis Healthcare in May 2018.41 This was in the context of investor concerns as to the board assessment of certain bids for the company, so this is a significant shareholder activism landmark in India. Also, in 2019, the board of CG Power and Industrial Solutions removed its promoter from his role as chairman (although this was not the removal of a directorship)42 in the wake of allegations of certain irregularities.

However, the question is whether attempts to change the composition of the board outside the particular circumstances set out above will work. In the past, this has not proved easy in practice. For instance, the attempt of a 20 per cent investor to seek board representation in relation to MRO-TEK and the attempt by Florintree Advisors to seek a seat on the board of PTC India did not succeed. Some investors have persisted in unusual ways, such as the provisions for a 'small shareholder' director by Unifi Capital (see Section II).43

In certain cases, shareholders have opposed the reappointment of senior incumbent management as directors. For instance, in July 2018, 22.64 per cent44 of the shareholders of HDFC Limited voted against the reappointment of Deepak Parekh, the group chair, as a director. Similarly, in September 2018, a significant number of investors opposed the re-election of Kumar Mangalam Birla (head of Aditya Birla Group) to the board of UltraTech Cement.45 Although both reappointments were ultimately approved, this scale of opposition in relation to such senior figures is noteworthy.

Regulatory developments

Four regulatory developments are likely to have a bearing on shareholder activism in India going forward.

First, SEBI has implemented a number of recommendations of the Kotak Committee to improve the governance of listed companies including minimum board quorum requirements, as the inclusion of at least one female director on the board (for the top 1,000 companies by market capitalisation), the enhanced role of certain board committees, the strengthening of independence declaration requirements and the enhancement of certain related party transaction provisions. Also, its recommendation on the separation of the role of the CEO from that of the chair will come into effect for the top 500 listed companies by April 2022. This should have a positive impact on the corporate governance landscape.

Second, in August 2020, SEBI published certain guidelines for proxy advisers as well as a grievance resolution procedure. This follows on from a working group paper SEBI published in May 2019 in which SEBI appeared to favour a 'light touch' approach in relation to proxy firms. The measures focus on greater disclosure by proxy advisers together with a SEBI scrutiny mechanism to ensure compliance, and are a step in the right direction and will create greater transparency.

Third, RBI has mandated that CEOs and full-time directors of certain banks cannot remain in office for more than 15 years (or 12 years where the individual is also a promoter or full-time director), after which there is a three year cooling off period. This is expected to encourage long-term succession planning.

Fourth, in 2019 SEBI permitted shares with superior voting rights in listed companies in certain sectors (e.g., technology). SEBI has attempted to balance these rights with shareholder protections such as requirements for improved governance standards, the requirement for the superior rights to be approved by a special resolution, limiting superior rights to 74 per cent and curtailing their use in certain situations (e.g., related party transactions, appointment and removal of independent directors and certain substantial transactions). Superior rights are required to terminate in five years (extendable once by the shareholders other than the superior rights holders). So far, take-up of these provisions has been low, but it remains to be seen how this will play out in practice.

In July 2021, SEBI initiated a consultation process to consider the easing some of the requirements to be satisfied for the issuance of shares with superior rights, so this is an area to watch going forward.

Outlook

Shareholder activism has focused on the larger listed companies. Most initial activism was event-driven (opposing related party transactions, share repurchases and acquisitions), but this has now expanded to cover executive remuneration, strategy, succession planning and abuse of position. The boards of listed companies have improved their governance, although in many cases there is still room for improvement, and few listed companies have meaningful investor relations teams. The question is where activism goes from here. Activists have not yet successfully mounted a full-blown challenge to the corporate strategy of a listed company because of the high levels of promoter shareholding and because the influence proxy firms have is limited in comparison to the United States. However, a convergence of activism and distressed investing is more probable. It is more likely that investors will be able to force strategic change in, or a restructuring of, an over-leveraged listed company, where for instance, the enforcement of share pledges has led to a dilution of promoter shareholding. In addition, continued shareholder engagement is likely to improve governance standards overall and prevent self-dealing.

Footnotes

1 Nikhil Narayanan is a partner at Khaitan & Co.

2 Section 149(10) of CA 2013.

3 Section 152(6)(a) and (c) of CA 2013. One third of the directors are subject to rotational retirement and can stand for re-election every year. There is also a rarely used alternative in Section 163 of CA 2013, which allows for the concept of proportionate representation for at least two-thirds of the board.

4 Section 151 of CA 2013 and Rule 7 of the Companies (Appointment of Directors) Rules 2014. For these purposes, a 'small shareholder' is one who holds shares in a listed company, the nominal value of which is less than 20,000 rupees or any other government-prescribed sum.

5 Ingovern, India Proxy Season 2017.

6 Tata Consultancy Services Limited v. Cyrus Mistry Private Limited, Civil Appeals No. 440-441 of 2020 published on 26 March 2021 at paragraph 19.42.

7 Section 169(1) of CA 2013. The reference to 'normally' is because this does not apply to directors appointed by proportional representation (which is very uncommon).

8 Allirajan Muthsamy, 'Shareholder Activism stalls promoter moves', The Economic Times, 5 July 2014.

9 With regard to shareholder controls, Section 197 of CA 2013 and Regulation 17(6)(c) of the Listing Regulations both require compensation to be approved by shareholders if they exceed certain thresholds.

10 Section 100(2)(a) of CA 2013.

11 Section 100(4) of CA 2013.

12 Section 100 (6) of CA 2013.

13 Section 110 of CA 2013 and Rule 22 of the Companies (Management and Administration) Rules 2014.

14 Sections 62(1)(b) and 62(1)(c) of CA 2013. This applies to both public and private companies.

15 'Undertaking' is defined as any undertaking in which the company's investment exceeds 20 per cent of the company's net worth (as of the audited balance sheet of the preceding financial year) or that generated at least 20 per cent of the company's total income during the preceding financial year.

16 Section 180(1)(c) of CA 2013.

17 Section 188 of CA 2013.

18 Regulation 23(4) of the Listing Regulations.

19 Regulation 26 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011.

20 In a board meeting of 27 June 2019, SEBI has recently permitted shares with superior voting rights in listed companies. This may open up an avenue for takeover defences, although there are a number of safeguards (such as a five-year sunset provision, limitation on the companies that can issue such shares and also restrictions on the use of superior voting rights in relation to related party contracts and other matters that SEBI may notify), which may limit their application in this context.

21 Section 230(6) and Section 232(1) of CA 2013.

22 Section 213 of CA 2013.

23 Umakanth Varottil, 'The Advent of Shareholder Activism in India', Journal on Governance, Vol 1 No. 6, 2012.

24 Tata Consultancy Services Limited v. Cyrus Mistry Private Limited, Civil Appeals No. 440-441 of 2020 published on 26 March 2021 at paragraph 19.42.

25 Section 245 of CA 2013.

26 The threshold for shareholders to be able to trigger this protection (i.e., a shareholding percentage) is the lower of 100 shareholders or a percentage of shareholders to be prescribed. Draft rules had proposed a 10 per cent threshold for this latter threshold, but this proposal is, at the date of publication, not yet in force.

27 (1843) 2 Har 361. CA 1956 did not recognise derivative action, so claimants needed to establish a case on the basis of common law. Academic studies have shown that this had little success (see note 21).

28 Section 88 of CA 2013.

29 Section 90 of CA 2013.

30 Khushboo Narayan, 'Bombay HC asks Cadbury to pay Rs 2,014.50 per share for buyback', Livemint, 18 July 2014.

31 In 2019, minority shareholders of Associated Broadcasting Company challenged the sale of the company and the appointment nominees of the acquirer on the board, alleging oppression and mismanagement and the NCLT passed a restraining order. However, press reports suggest that, subsequently, a settlement occurred with SAIF Partners, a key minority shareholder, pursuant to which the transaction appears to have completed.

32 Subsequently, in January 2020, the Supreme Court ordered SEBI to complete the investigation in four months.

33 'Shareholders reject Tata Motors pay plan', The Business Standard, 4 July 2014.

34 Proxy firms are required to register with SEBI, although certain foreign proxy firms are not required to do so. However, SEBI has recently recommended that foreign firms also follow a common code of conduct with domestic proxy firms on a 'comply or explain' basis (see Section V).

35 The only real example was in 2012 when CLSA wrote to the then CEO of Infosys, challenging its business model, but that did not result in any meaningful change or shareholder engagement.

36 SEBI circulars SEBI/IMD/CIR No. 18/198647/2010 dated 15 March 2010; CR/IMD/DF/05/2014 dated 24 March 2014; and SEBI/HO/IMD/DF2/CIR/P/2016/68 dated 10 August 2016.

37 Ingovern, India Proxy Season 2017.

38 'Sun Pharma drops wind energy investment plan', Business Standard, 25 November 2015.

39 Himank Sharma and Aradhana Aravindhan, 'Big Indian funds challenge Maruti Suzuki over Indian Suzuki plant', Reuters, 24 February 2014.

42 He subsequently resigned from his non-executive directorship.

43 Ingovern, India Proxy Season 2017.

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