The Companies Act, 2013 lays down the rights provided to the minority shareholders in any organisation. The main purpose of providing such rights is to ensure that the shareholders are not oppressed of their freedom to voice their opinions and suggestions, that they are protected and are made aware about the rights available to them from time to time.
Before laying down the rights provided to such minority shareholders, it is important to define as to who constitute as minority shareholders. Minority shareholders refer to those individuals or firms, who own less than 50% of the total shares of a company or an organisation. Such shareholders do not have any voting powers and no individual minority shareholder can himself/herself elect a director.
As a result of such constraint on powers, there are certain rights which are given to such minority shareholding community, which helps them to raise their concerns regarding the company. These rights are-
Oppression implies that the company is exercising extensive control, or oppressing the shareholders from voicing their concerns or suggestions or not letting them be a part of the company’s activities etc,. In such a case, the Act, under section 241 and 242 allows the shareholders to file an application to a tribunal, wherein the tribunal shall provide its judgment on the basis of whether the company is acting in a discriminatory or prejudicial manner or if the company is wound up, it may lead to unnecessary oppression.
Mismanagement on the other hand means that the company is performing certain tasks which are against the public interests and not acceptable with the norms of conducting business.
2. RECONSTRUCTION AND AMALGAMATION-
In case where any company decides to amalgamate or reconstruct its structure, for example through mergers or acquisitions, it maybe possible that the minority shareholders may not given the chance to give their acceptance or even made aware about such reconstruction. In such a case, the Act gives the shareholding community the power to file a suit in the court, and seek necessary compensation or damages, or whatever the court may deem useful.
3. RIGHT TO SEEK INFORMATION IN THE APPROPRIATE MANNER-
It is the right of the shareholders and the obligation of the organisation, to provide all necessary information to the shareholders, so that they take well informed decisions, and such information should be disclosed in ways which are easy yet clear and do not create any information. No information should remain out of the reach of the minority shareholders.
4. RIGHT OF MINORITY SHAREHOLDERS TO BE HEARD-
The main purpose of awarding this right to the minority shareholders is to ensure that they are being heard, they have the liberty and the freedom to put forward their suggestions/ideas/opinions, and help the company perform better. This right will ensure that such minority shareholding community is not left behind, and that the company takes its decisions keeping their views into consideration.
These rights allow the companies to perform better, keeping all their stakeholders into concern, and at the same time prevent them from undertaking any form of discriminatory or wrongful decisions. They keep the companies in line with the law, and at the same time allow them to protect themselves from entering into any form of malpractices and legal actions.
