Abstract

“A Proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company.” In India where there is vast diversity be it in the geography, language, religious beliefs and economy, democracy is the form of government which most appropriate and to quote Mr Mani Shankar Aiyar “democracy is only a necessary condition of good governance; it is not a sufficient condition of good governance. But if you don't have democracy, you cannot have good governance.” The company being an institution following the democratic process gives majority shareholders powers in policy-making as without the will of majority shareholders a resolution cannot be passed successfully. Unlike the majority shareholders, the minority shareholders are usually the middle or lower class of a society who invests money for dividends and returns and majority shareholders most of the neglect this dividend in their decisions. In the present law, there are major flaws such as the lack of equal representation in the company of minority shareholders and majority shareholders leading to the appointment of the board of directors by the majority shareholders, which may result in misappropriation of the company's assets and funds deriving their benefits from the company's fund.

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