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Stream/Area:
-
Subject:
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Paper ID:
IJSREM68330
Volume:
10 |
10 |
Oct 2026
Pages:
1-10
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
CORPORATE LAW
SRM INSTITUTE OF SCIENCE AND TECHNOLOGY,KATTANKULATHUR
Corporate governance rests on the principle that a company is managed in accordance with the wishes of the majority of its members. That principle promotes efficient decision-making, but it also exposes shareholders with smaller holdings to the risk that those in control will use their power unfairly, whether by excluding them from management, diluting their holdings, diverting company resources or manipulating the company’s affairs for private advantage. The Companies Act, 2013 addresses this risk mainly through Chapter XVI (sections 241 to 246), which provides remedies for oppression and mismanagement, and through supporting provisions on class actions, investigation, minority exit and the appointment of a small shareholders’ director. This review article examines whether those remedies adequately protect minority shareholders in India while respecting the legitimate authority of the majority and the board. It reviews the statutory text, the leading judicial interpretations and selected comparative principles, with particular attention to the standing requirements in section 244, the powers of the National Company Law Tribunal (NCLT) under section 242, and the class-action mechanism in section 245. The article argues that the statutory framework is wide in its remedial scope, but that its effectiveness is limited by demanding standing thresholds, the evidential burden of proving oppression, procedural delay and uncertainty about the standard of unfairness. It recommends clearer judicial guidance on the standard of oppression, calibrated use of the waiver power, faster interim relief, and stronger disclosure and approval safeguards in related-party and capital-raising transactions. This article uses a doctrinal and analytical review method. It relies on legislation, reported decisions and selected secondary writing. It does not provide an empirical estimate of the number or outcome of petitions before the NCLT, and the case descriptions should be verified against the full law reports before citation in any formal submission.
KEYWORDS
The Companies Act, 2013 offers minority shareholders a broad set of remedies. Sections 241 and 242 give the Tribunal wide power to bring oppressive or prejudicial conduct to an end, section 245 provides a collective remedy, and other provisions on meetings, special resolutions, related-party dealings, small shareholder representation and minority exit form part of a wider protective framework. In design, the system recognises that majority rule is a principle of efficiency and not a licence for unfairness. In operation, the system faces limits. The standing thresholds in section 244 can exclude shareholders with real grievances, the burden of proving oppression is heavy, the standard of unfairness is not always applied consistently, and delay can reduce the value of the final relief. Judicial caution, as shown in the Tata Sons litigation, protects companies from interference in legitimate business judgment, but it also underlines the need for petitioners and Tribunals to have the information and procedural tools required to test serious allegations. The best approach is neither a rule that favours the majority by default nor one that treats every minority complaint as proof of wrongdoing. It is a framework that requires proof of unfair or prejudicial conduct, allows prompt and tailored relief where that proof is made, and encourages early disclosure and governance practices that reduce the need for litigation. Minority shareholder protection, properly understood, supports investment and confidence in the corporate form, and the continued development of principles, procedure and institutional capacity is essential for the Act’s remedies to deliver the protection they promise.
1. Companies Act, 2013 (India), as amended. 2. Companies Act, 1956 (India), ss 397–398 (repealed). 3. National Company Law Tribunal Rules, 2016. 4. Ministry of Corporate Affairs, Report of the Expert Committee on Company Law (Dr. J.J. Irani Committee, 2005). 5. Foss v Harbottle (1843) 2 Hare 461. 6. Edwards v Halliwell [1950] 2 All ER 1064. 7. Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (HL). 8. Shanti Prasad Jain v Kalinga Tubes Ltd AIR 1965 SC 1535. 9. Needle Industries (India) Ltd v Needle Industries Newey (India) Holding Ltd (1981) 3 SCC 333. 10. Hanuman Prasad Bagri v Bagress Cereals (P) Ltd (2001) 4 SCC 420.
Publication Date
10/26/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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