Remedies for oppression and mismanagement under Section 397 and 398 of the Companies Act, 1956 provide for some relief to shareholders. However, in order to invoke the provisions of Sections 397/398, the petitioners must demonstrate their standing under Section 399. Section 399, which deals with the right to apply under Sections 397 and 398, says in the relevant part: (1) The following members of...
Derivative Actions – Part I
The issue of shareholders making claims on behalf of a corporation has been a bone of contention ever since the decision in Foss v. Harbottle. However, in recent times, two particular aspects of this controversial area of corporate jurisprudence have received significant attention. These are the issues of multiple derivative claims, and the statutory requirements laid down for a derivative claim...
Shareholders and Their Duties under Indian Law
Under the Companies Act, 1956, shareholding in an Indian company is almost entirely associated with concepts like rights, entitlements and ownership. This emanates from Section 82, which reads as follows: The shares or debentures or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company. Shareholding is generally not...
Corporate Governance and Protection of Minority Shareholders
Corporate law and corporate governance norms are devised to address certain agency problems (as they are known in economic terms). In countries where there is diffused shareholding (such as the U.S. and the U.K.), the agency problem that is prevalent is one between managers (the agent) and shareholders (the principal). Diffused shareholding gives rise to the collective action problem where each...
Recent Comments