India’s capital markets are experiencing a shift unlike any in their modern history. Retail investors now enter public markets in unprecedented numbers, domestic institutions steadily deepen their footprint, and corporate India conducts mergers, acquisitions, restructurings and demergers at a scale once reserved for global markets.
On paper, this evolution should empower shareholders more than ever before. With improved access to information, digital voting, and greater scrutiny of Boards, the shareholders’ mandate should ideally translate into tangible corporate outcomes. Yet the lived experience of many investors reveals a persistent gap between intent and implementation. Shareholder approval, no matter how overwhelming, often waits for a system that moves far too slowly to honour it.
When Economic Logic Collides With Procedural Delay
Several recent corporate developments show that India’s regulatory and judicial architecture, though robust in intent, struggles with timeliness. In the high-profile acquisition of Bhushan Power and Steel by JSW Steel under the Insolvency and Bankruptcy Code, the resolution process became a test of endurance.
Appeals, counter-appeals, administrative gaps, and jurisdictional overlaps stretched a transaction that was envisioned to conclude within months into a multi-year journey. For creditors and shareholders, this delay did not simply defer recovery; it materially altered the eventual economic value, because the market cycle did not wait for the process to catch up.
A similar story played out with Sarda Energy and Minerals in its acquisition of SKS Power. Even after approvals and operational handovers, fresh objections and litigation kept the deal mired in uncertainty, delaying integration, capital deployment and long-term planning.
Investors who voted in favour of such acquisitions did so with an expectation of timely clarity, not indefinite pendency. In global practice, particularly in markets like the United States and the United Kingdom, regulatory adherence is strict, but timelines are also predictable. It is the predictability, not necessarily the speed, that gives investors confidence. India’s challenge lies in achieving both.
The Vedanta Demerger, A Landmark Mandate Waiting for Movement
Perhaps the most illustrative example of this tension is the proposed demerger of Vedanta Limited. Aimed at creating multiple focused entities that could unlock sharper valuations and operational discipline, the proposal secured one of the largest affirmative shareholder mandates in Indian corporate history.
Lakhs of investors participated and overwhelmingly endorsed the move. Yet months after this historic approval, the demerger has been unable to reach regulatory finality. For shareholders, this delay is not a mere administrative footnote. It erodes the time value of money, blurs valuation expectations, and creates uncertainty in a market environment where sectoral cycles shift rapidly. When markets move ahead but regulatory processes do not, shareholder voice becomes structurally disadvantaged.
Why Delay Translates into Economic Distortion
In fast-moving capital markets, time is a crucial economic variable. The value of a merger, demerger, slump sale or acquisition is dependent on expected synergies, cost structures, commodity cycles, interest rate regimes, and sectoral momentum. A corporate action that is value-accretive in the first year may become marginal or even dilutive if pushed into the third.
Investors understand this. They factor timing, not merely approval, into their valuation models. When processes drag, the intended benefit of a corporate move can shift dramatically, creating an unintended transfer of value between promoters, financial investors, and public shareholders.
India’s regulatory journey for large corporate actions typically passes through a multi-layer system involving stock exchanges, statutory regulators, tribunals, courts, ministries and financial institutions. Each institution operates with its own priority, workload and timeline. The absence of synchronised deadlines, coupled with procedural appeals and jurisdictional overlap, results in a labyrinth that even economically sound transactions struggle to navigate.
Encouraging Signs, But Not Enough For Systemic Comfort
Despite these challenges, there have been promising developments. In certain long-pending open offers, regulators have recently taken decisive action, clearing proposals that had stagnated for years and finally delivering liquidity or acquisition opportunities to thousands of minority investors.
In select insolvency matters, tribunals have begun observing that repetitive litigation erodes economic value and undermines the core purpose of the resolution framework. These are important signals, showing that regulatory bodies do recognise the time-sensitive nature of investor interest. But such decisions still appear episodic rather than systemic.
Other global markets have already moved to time-bound mechanisms. For instance, the United States Securities and Exchange Commission follows strict procedural clocks for mergers and tender offers. The United Kingdom’s Takeover Panel enforces a disciplined framework that leaves little room for ambiguity or delay. Even Singapore’s corporate approval environment has evolved into a more time-predictable system. India, by comparison, still carries a structural lag that investors are forced to absorb.
Synchronised Speed and Transparency, What the System Needs Now
To align with India’s aspiration of becoming a top-three global capital market, shareholder democracy must transition from a procedural concept to an operational reality. Three changes are essential. The first is transparent and publicly available pendency data for major corporate actions, enabling all stakeholders to understand delays, bottlenecks, and expected timelines.
The second is harmonised deadlines across regulatory and judicial bodies, preventing one institution from slowing an otherwise unanimous transaction. The third is a shift in mindset towards economic finality, recognising that the substance of shareholder will must carry more weight than the inertia of procedural complexity.
When Pace Becomes The Protector Of Shareholder Faith
Ultimately, the power of the shareholder vote is not determined at the moment of approval, but at the moment of implementation. When the system moves with coherence, clarity and urgency, shareholders’ voices are honoured as intended, and corporate outcomes reflect democratic mandates.
But when processes lag, even the strongest majority vote remains suspended in bureaucratic amber. India’s markets have matured, its investors have matured, and corporate India has matured. Now the regulatory machinery that governs them must evolve at the same pace. Only then will shareholder confidence translate fully into shareholder justice, ensuring that every vote cast carries its rightful economic value.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication. |
