Minority protection in company law essay

Protecting the interest of minority

Protecting the interest of minority
Protecting the interest of minority shareholders. The company law board in this case.

Now, company a commenced an action against company b and at a meeting of company a, the majority passed a resolution that was ultimately favourable to company b and not to company a. Earlier, if a case of oppression was established, the only remedy available was a winding up order. In such a case, if the majority purport to do any act by merely passing an ordinary resolution or do not pass a special resolution in keeping with the law, the majority cannot enforce their decision on others and any member may bring an action restraining the majority. The claim was rejected in respect of those transactions which a majority of the shareholders of the company had the power to confirm or ratify. In such a situation applying the majority rule would be unjust and impracticable.

With respect to unfair treatment, an aggrieved member can present a relief petition to any court, (in practice, all petitions are presented to the companies court) , which can order for the winding up of the company, on the ground of conduct that has proved to be unfair and prejudicial to the interest of the members in general or a minority of the members, including the petitioner. Professor david bakibinga in his book company law in uganda at page 2 defines a company. Hanuman prasad bagri therefore, summarising the majority rule governing decision-making among shareholders of a company, it is important to understand that a company is a legal person separate from its members. However, if some members eventually withdraw their consent to the application, it does not render the right of the others to proceed with the application. Wrongdoers in control if wrong doers to the company are in control of the company, they will certainly not allow the company to file an action against such wrong doers.

In case of failure to do so, it is important that the interest of minority shareholders be protected. The rule laid down in these cases has also been applied in the indian context in various cases. In the day-to-day working of a company, certain decisions need to be taken regarding the management of the company and these decisions are generally taken by the majority members. In such a case, if the decisions taken, are not in the larger interest of the company as a whole, but only caters to the interest of one particular group, the minority group whose interest may have been violated can raise its voice against such an action. Individual membership rights every shareholder has vested in him certain individual membership rights against the company , some of which are vested in him by the indian companies act itself. Some courts though probably a minority would prohibit buyer from. Fraud on minority a majority carrying out a fraud on the minority is also an exception to the majority rule. They owe a fiduciary duty to the company to act in the best interest of the company, lawfully. After the enactment of the indian companies act, minority was given certain protections, which included protection against oppression and mismanagement, as we have already discussed. In the second case, of winding up of a company, an application may be made to the court by the official receiver, the liquidator or by any creditor of the company or with leave of the court, by any present or past member of the company, for an order against any present or past officer of the company, any person who has acted as a liquidator, administrator or administrative receiver of the company or any other person who has been concerned or taken part in the promotion, formation or management of the company, and who in the case of any such person has misapplied or retained or become accountable for any money or property of the company, or has been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company.

The current laws in england and wales
Introduction the protection of minority shareholders. Balance required between the protection of minority shareholders. Company law newsletter, 281, pp.

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Moreover, he is under no obligation to disclose the evidence or information that initiated the investigations or the reasons for ordering the investigations. Protection of human rights act, 1993 and the police act etc. When the minority initiated an action, the impugned resolution was held invalid. In such cases the rule is that the corporation should sue in its own name and in its corporate character. In case of failure to do so, it is important that the interest of minority shareholders be protected.

If the plaintiffs conduct may jeopardise equitable relief from being meted out to the company or if there is an undue delay in bringing an action, the court may refuse to accept the plaintiffs action. Acts requiring special majority certain acts call for passing of a special resolution (i. All material facts should be set out in the petition itself. In course of doing so, the researcher shall first examine the rule regarding majority shareholders rights in detail that has been laid down by landmark judgments under common law. In ruling over the case, the court opined that such an action cannot be brought by minority shareholders.

The right to give protection is part of state sovereignty that is acknowledged in international law. The aim must be to strike a balance between the effective control of the company and the interest of the small individual shareholders. Fraud on minority a majority carrying out a fraud on the minority is also an exception to the majority rule. What is the obligation of a state child protection agency? They have obligation protect children. A dissatisfied minority shareholder has three general statutory remedies against mismanagement or unfairness on part of those who control the company firstly, it gives minority shareholders a special remedy in situations where they have bee treated unfairly and harmfully. Professor david bakibinga in his book company law in uganda at page 2 defines a company. They owe a fiduciary duty to the company to act in the best interest of the company, lawfully. In case of mismanagement, under section 398, the affairs of the company should be conducted in a prejudicial manner, or a change in the management of the company, should lead to lead to the affairs of the company being conducted in that manner. On a closing note, it is interesting to know, that in england, the law has changed drastically since 1980. Major bribes role malfeasance being abuse inconveitent laws minor bribes playing favorites gratuities failure to protect.

Protecting minority shareholders law