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The Rights of the Minority Shareholders

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When the method to make the company more profitable does not make the individual or minority shareholder profitable and oppresses his or her proprietary rights, then the violation occurs. As in the case of Greenhalgh Vs Arderne Cinemas (1951), the proprietary rights could get violated when the company tries to meet the overall need of the company. This has to be ratified over a period of time. Rules brought in by the governmental bodies could result in minority shareholders being given a raw deal as in the case of Gambotto. The rule of the majority dominating the requirements and needs of the minority shareholders has been in the law for more than a century now.

It all started with the Allen Vs Golden Reef (1900) when the company tried to oppress the minority shareholders. At the same time, the court has also held valid that the member cannot and should not vote in his own selfish interest ignoring the requirement of the company and the overall benefit that a company stands to gain. Such a voting pattern is also not accepted by the courts when they tend to vote in favor of a decision that is not in line with the best interests of the company.

The same is also valid when the person with the vote tries to suppress those shareholders who do not have voting rights and by whose vote the entire process is stilted. As Mergary J held in the above-referred case, there was ‘ no right of a shareholder to vote in his own selfish interest to injure his vote less fellow shareholders by depriving them a cause of action and by stultifying the purpose for which the company is formed’ .

By intervening this way, the judge had referred to discontinuing the proceedings of the directors of the company against some of the shareholders on similar lines. According to the English law on this factor of contention, it clearly states the following: 1. Any decision to alter the articles of association of the company should be done in the best interests of the company in the forefront irrespective of the individual interests.

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preview essay on The Rights of the Minority Shareholders
  • Pages: 8 (2000 words)
  • Document Type: Essay
  • Subject: Law
  • Level: Undergraduate
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