The Protection Given To ” Minority Shareholders”


The protection given to minority shareholders as dictated by company law

From the preceding decade, attention is being paid towards the rights of the minority shareholders. Those are being subjected towards the controlling of the behavior of the shareholders which is prejudicial, oppressive and is discriminatory (Guillén, and Capron, 2016). This is the behavior which is being composed of the withholding of the dividends, this is excluded from the management as well as the range of the further reforms of the dealings which are self-interested. The corporate sector is being reformed by major of the countries for providing better protection to the minority shareholders with the assistance of the preventive mechanisms as well as numerous remedies.

Corporate law is there to understand the procedure of constitutional law. The status of the minority has mattered to law. While the constitutional jurisprudence of the equal protection of today has aspired to the colour-blindness, the concern of the minority is being placed by the corporate law towards the heart of the endeavour (Guillén and Capron, 2016). The minority that belongs to the corporate are recognized as minority shareholders that are the investors are holding noncontrolling and small interests within the corporation. The solicitude of the law is being restricted within the minority shareholders while the minority races are not being included within it.

In the context of the corporate, fairness is not being regarded as a point but is being regarded as a value spectrum. The inquiries that lie within this context has been seeking for determining the dropping of the transactions within that spectrum. There lie some questions among the within the rights among the shareholders, specifically within the similar class, where there lies some authority where are spectrums among the spectrums.

The contraction theory of corporate law

The corporate law has facilitated and has regulated the business firms of the country Australia. The account regarding its functions is required to be premised over the theory and the existence of the firm. These are the questions that are being posed by some of the scholars and have formed the research agenda of the firms’ economic theory, therefore, the theory of the firm possesses some starting point regarding the functional accounts considering the corporate law.

The answer to the Coase has focused on the contraction cost. The parties which are being involved within the firm has planned to interact with each other over a long duration. The contractarian theory is being applied within the corporate law with the contraction of the firms.

The statutory rights of the minority shareholders:

The minority shareholder, who is dissatisfied possesses three remedies of the general statutory against the mismanagement as well as the unfairness on the segment of those, those are being responsible for the control of the company under the company law. All these are being listed like:

Firstly, the minority shareholders are being provided with a special remedy for the situation of getting treated harmfully and unfairly.

On the second ground, the minority shareholders are being permitted with numerous claims considering the company that is free from the restrictions which most of the company has enforced during the time when the company has got wounded.

In the last segment, the minority shareholders of the country Australia are being allowed for attaining the remedies in an indirect manner with an investigation considering the affairs of the company through the inspectors, who is being chosen by the Secretary of the State for Trade and Industry to be abide by the report of the inspector by introducing some action which will work as remedial.

Respecting the unfair treatment, a relief petition can be represented by the aggrieved member towards any of the court. The entire petitions are being reported within the court of the company, that can place the order to the company to wind up over the ground of contract which has proved to be unfair and is prejudicial towards the interest of the members within the general and within the minority of the members that is comprised of the petitioners (Cremers, 2016).

While in the second case, during the time of winding up of the company there lies a requirement of creating an application which is being required to be presented to the court through the liquidator, the official receiver and along the courts’ leave with the assistance of any present or past member of the company regarding an order against any of the past or the present officer of the company, any of the person who has been acting as a liquidator or else any of the creditor of the company, the administrative receiver or the administrator of the company or else any of the other person those are anxious or has participated in the formation, promotion as well as the management of the company (McCracken et al. 2018).

While under the third remedy, which is available towards the minority shareholders, one or more inspectors are being appointed by the Secretary for Trade and Industry for the aim of performing some investigation over the affairs of the company (Ashraf and Zheng, 2015). The inspectors of the company are being appointed by the secretary of the State beneath any of the available grounds of the appointment without the specification of the reliability of the ground. Though, he never comes under any of the obligations for disclosing the information or the evidence which is being initiated by the investigations as well as the reasons regarding the ordering of the investigations.

Along with all these statutory rights, the minority is being provided with more power than the prior time for seeking remedy regarding any of the violations considering their rights through the majority. Redressal is now required by the minority shareholders from the court considering any of the violations considering the rights as well as is duly protected under the governing laws considering the functions of the company (Bartkus et al. 2018).

The rule which is being concerned regarding the interest of the minority shareholders have been evolving for a long span as the rule of the majority is being laid beneath the common law (Beharrell and Philo, 2016).

The minority rights of the shareholders are being depended over the percentage of the shares as well as the percentage of the votes that are being held within the company (Marshall, 2015). These are as follows:

5% of the rights are being allotted to the court for the prevention of the conversion of the public company within a private company (Bartkus et al. 2018). A general meeting is required to be called. Circulation is being required about the written resolution which is being provided to the shareholders. There lies a requirement of the passing of the resolution towards an annual general meeting of the public company. A minimum of 10% right is being allotted to the direction of calling a poll vote over the resolution. A maximum right of more than 10% is being provided for the prevention of the meeting, which is being held for short notice. 15 % of the rights are being applied towards the court for canceling the variation of the class-rights that is being provided to such shareholders that do not consent to as well as vote in the favor of the variation. A maximum of 25% of rights is being provided for the prevention of the passing of the special resolution.


Ashraf, B.N. and Zheng, C., 2015. Shareholder protection, creditor rights and bank dividend policies. China Finance Review International5(2), pp.161-186.

Bartkus, G., Belicka, D., Civilka, M., Conac, P.H., Teichmann, C., Lambooy, T. and Hannigan, B., 2018. Study on minority shareholders protection.

Beharrell, P. and Philo, G., 2016. Trade unions and the media. Springer.

Cremers, K.J., 2016. The shareholder value of empowered boards. Stan. L. Rev.68, p.67.

Guillén, M.F. and Capron, L., 2016. State capacity, minority shareholder protections, and stock market development. Administrative Science Quarterly61(1), pp.125-160.

Marshall, A., 2015. Industry and trade. Vani Prakashan.

McCracken, M., McIvor, R., Treacy, R. and Wall, T., 2018, March. A study of human capital reporting in the United Kingdom. In Accounting Forum (Vol. 42, No. 1, pp. 130-141). Taylor & Francis.

Open chat
Welcome to Oman essay.
How can I help you?