Corporate Governance Challenges in Protecting Minority Shareholder Rights Under Indian Company Law

Abstract

Today, Corporate Governance is one of the most significant parts of the corporate law related to transparency, accountability, fairness and protection of the interests of stakeholders. The minority shareholders are weak in the company as they have less voting power when compared with the votes they had earlier. The legal provisions in India for safeguarding the interest of minority shareholders are provided in the Companies Act 2013, the regulatory framework of Securities and Exchange Board of India (SEBI), judicial precedents and corporate governance codes. The introduction of these changes in the law, however, has created a number of issues for minority shareholders, including a high concentration of ownership, lack of independence of the board, related party transactions, asymmetric information, and weak enforcement mechanisms, in the face of the dominance of the promoters. Statutory protection may fail due to the many examples of family-owned businesses and promoter-driven corporations. The paper critically analysed the company law problems which arise in the context of rights of minority shareholders. It looks at the existing legal framework, the interpretation of the law by judges, proposes areas that need improvement in governance and issues and suggests better laws to increase the protection of minority shareholders and enhance corporate accountability and investor confidence.