Varottil, Umakanth --- "The stakeholder approach to corporate law: a historical perspective from India" [2018] ELECD 79; in Wells, Harwell (ed), "Research Handbook on the History of Corporate and Company Law" (Edward Elgar Publishing, 2018) 381

Book Title: Research Handbook on the History of Corporate and Company Law

Editor(s): Wells, Harwell

Publisher: Edward Elgar Publishing

ISBN: 9781784717650

Section: Chapter 14

Section Title: The stakeholder approach to corporate law: a historical perspective from India

Author(s): Varottil, Umakanth

Number of pages: 20

Abstract/Description:

Chapter 14 looks at modern Indian corporation law, finding in the development of Indian corporation law since 1850 an oscillation between stakeholder and shareholder primacy views of the corporation. Colonial India’s corporate law, imposed by England, drew on English corporate law and treated the company as a private matter with little obligation to non-shareholders—a view that carried over into the early days of Indian independence. By the 1960s, however, India’s embrace of socialism led to a change in its company law, as a view that the company had a public character, not just a private one, led to the addition of new protections for constituencies including employees, creditors and consumers. This stakeholder trend was in turn reversed in the 1990s, with deregulation and adoption of new corporate governance requirements and a disclosure-based securities law regime, both targeted at protecting shareholders. In the latest twist, the Companies Act, 2013 has again moved Indian corporation law in the stakeholder direction, providing greater protection to non-shareholders and, even more striking, mandating that large companies spend at least 2 per cent of average net profits on social causes. As the chapter shows, while originating in English company law, Indian law has diverged sharply from it, driven by India’s own distinctive economic and political imperatives.