Minority Shareholder Activism And The Case For The Application Of The Business Judgment Rule In Indian Jurisprudence
Hetvi Modi, KPMSOL, NMIMS, Mumbai
ABSTRACT
This paper examines the issue of minority squeeze-outs in the context of mergers with relevant legal provisions given in The Companies Act, 2013, where majority shareholders often seek to eliminate minority stakes to gain full control over a company. This paper further tells how the legal framework addresses or fails to address the issue, while also seeing the concept of Business Judgement Rule in India which gives the majority shareholders the wide stance of proving to be acting in good faith while making decisions for the company, while such transactions are often justified under business efficiency they frequently raise concerns about fairness and the protection of minority shareholder rights and also discusses how courts interpret prejudice and fair value. It further delves into a case study which specifically focuses on Section 66 of the Companies Act, 2013. The paper concludes by identifying legislative gaps in the provisions of the act and inconsistencies in the cases and finally proposes directions to reform.
Keywords: Minority Shareholders, Business Judgement Rule, squeeze outs, The Companies Act, 2013, National Company Law Tribunal.
