A Comparative Distinction Between The Provisions Of Oppression And Mismanagement In The 1956 & 2013

A Comparative Distinction Between The Provisions Of Oppression And Mismanagement In The 1956 And 2013 Act

Ananya Sivanandaraaj, Jindal Global Law School

ABSTRACT

A company just as a democratic sovereign is run by a democratic process of voting where most of the company’s decisions and internal management is taken based on the majority. Every shareholder of a company has the right to vote, depending on their numeric value holding threshold and the type of shares they own. There may be instances where there are 10 shareholders in total and 1 holds majority of the shareholding and the rest just a miniscule amount of the shareholding. Which means, in terms of holding, the majority shareholders have an advantage. When there is a conflict of interest between the majority and the minority shareholders, where majority shareholders make decisions based on their preferences and not in light of a legitimate concern for the organization, the privileges of minority shareholders are prejudiced. As a result, the challenge for India’s adjudicating authorities is to balance these competing interests by safeguarding the rights of minority shareholders while allowing the company to operate efficiently within the rules of the law. Thus, this paper is going to focus on analysing the provisions of oppression and mismanagement given under the Companies Act of 1956 and 2013 which safeguards minority shareholders’ rights and interests against oppressive actions of the majority shareholders and draw a distinction between the provisions of the two Acts.

Keywords: Oppression and Mismanagement, Minority rights, Companies Act 2013 and 1956, Section 397 and 398, Section 241