Who are minority shareholders?
Any shareholder holding a nominal or minimal amount of shares, not sufficient to effect any change is a minority shareholder of a company.
As per the Companies Act, 2013, the provisions providing for the right of minority shareholders is as follows:-
1. Right of shareholder of a private company to vote
against entrenchment[1];
2. Right of shareholder to object to amendment in
prospectus; right to be given option to exit and exit price as determined by SEBI[2];
3. Right to object to changes in shareholder rights,
and apply to the Tribunal for the cancellation of such variation[3];
4. Right to freely transfer shares[4];
6. Right of shareholder to appoint a director in a
listed company[6];
7. Right to object to a compromise or arrangement made
with members or creditors;[7]
8. Right of minority shareholder to be notified of the
intention of majority shareholders to acquire remaining equity shares[8];
9. Right of minority shareholders to offer minority
shareholding in company to majority at a price as determined by the valuer[9];
10. Right of minority to receive payment and delivery of
shares through the transferor company, acting as a transfer agent[10]
11. Right to receive on pro-rata basis , additional compensation received by majority
shareholders on transfer of shareholding, by negotiating a higher price[11]
12. Right of residual minority equity shareholders to
continue under section 236, even on failure of majority shareholders to
purchase minority shareholding[12];
13. Right to make an application to the tribunal in
cases of oppression and mismanagement [13];
complaints may relate to:-
1.
Affairs of
company conducted in a manner prejudicial to his or another’s interest;
2.
Material change
in the company, not in the interest of shareholder
14. Right to file class action suits in when affairs of
the company are being conducted in a prejudicial manner[14];
the suit seeks an order against the company, and can relate to the following:
1.
To restrain the
company from committing an act which is ultra vires[15];
2.
To restrain the
company from committing breach of any provision of MoA[16];
3.
To declare a
resolution altering the memorandum or articles of the company as void if the
resolution was passed by suppression of material facts or obtained by
mis-statement to the members[17];
4.
To restrain the
company from doing an act contrary to the provisions of the Act[18];
5.
To restrain the
company from taking action contrary to any resolution passed by the members[19];
6.
To claim damages
or compensation or demand any other suitable action[20]
from directors, auditors ,any experts, partners;
10. During
the preparation of consolidated financial statements, profit or loss
attributable to “minority interest” and
to owners of the parent in the statement of profit and loss shall be presented as allocation for the period. Right
of the “minority interests” within equity shall be presented separately from the equity of the owners of the parent in the balance sheet[21];
11. Right to have interest safeguarded by the
independent director[22];
|
S.No
|
Section
|
Provision
relating to
|
Notified
|
|
1.
|
27 (2);
115;
151;
|
MINORITY
PROTECTION
|
YES
|
|
2.
|
48(2);
235;
236;
|
MINORITY
PROTECTION
|
NO
|
|
3.
|
58(2)
|
ENFORCEABILITY OF RESTRICTIONS ON TRANSFERABILITY
|
YES
|
|
4.
|
5(3)
|
ENTRENCHMENT
|
YES
|
|
5.
|
Proviso to S.230(4)
|
RAISE AN OBJECTION TO A
COMPROMISE OR ARRANGEMENT
|
NO
|
[1]
5(4):Articles
[2]
27(2): Prospectus
[3]
48(2): Variation of shareholders rights
[4]
58(2): Refusal of Registration and appeal
against refusal
[5]
115: Resolutions Requiring special notice.
[6]
151: Appointment of director elected by small shareholders
[7]
230(4) Proviso
[8]
236(1): Purchase of minority shareholding
[9]
236(2): Purchase of minority shareholding
[10]
236(5): Purchase of minority shareholding
[11]
236(8) Purchase of minority shareholding
[12]
236(9) Purchase of minority shareholding
[13]
241: Application to Tribunal for relief in cases of oppression, etc.
[14]
245: class action
[15]
245(1)(a)
[16]
245(1)(b)
[17]
245(1)(c)
[18]
245(1)(d)
[19]
245(1)(e)
[20]
245(1)(f)
[21] General Instructions For The Preparation Of
Consolidated Financial Statements
[22] CODE FOR INDEPENDENT DIRECTORS
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