Safeguarding the Rights of Minority Shareholders under Corporate Governance in India

Author Name : Nayan Varma

ABSTRACT

The Companies (Amendment) Act, 2020 brought in several amendments in various sections and even inserted new provisions for the betterment and smoother functioning of the statute in India but it unfortunately neglected injecting clauses that strengthen the position of Minority Shareholders in the company and viable attributes regarding their protection. Even though the Companies Act of 2013 provides rights to Minority Shareholders for protecting their interests in respective companies and also addresses the basic issues of abuse generally faced by the minorities from the majority or others in control of the company, it fails to manoeuvre through the existing lacunae and its limitations. The legislation hasn’t reached a pedestal where every shareholder is treated alike and has similar legal obligations towards the decision-making procedures of a company which is where recommendations have been suggested to resolve the pre-existent gaps. Moreover, realistically speaking an offer to redress the Minority’s grievances is also unavailable in the Act.  The values, ideologies and visions of the company should be such that it caters to and provides an umbrella of protection not just to the controlling stakeholders but to the Minority as well, keeping the interests of all protected and focusing on the needs of everyone jointly without any discrimination. It is also important to consider how well aware people are about the same, because a statute would be irrelevant if its execution is compromised or doesn’t suffice the purpose for its enaction, which primarily herein is: Minority Protection, an essential aspect of diligent corporate governance.

Keywords:Company Law, Corporate governance, India, Minority shareholders, Safeguards