Minority Shareholders to Take on Big Boys in Boardrooms 

Minority stakeholders, who have been neglected by managements until now, will now be able to take on the big boys, with the government set to table the New Companies Bill in Parliament in the forthcoming winter session.

Under the bill, minority shareholders would be provided easy exit options and the right to dissent. Besides, promoters would have to compulsorily buy out the shares of minority stakeholders in cases of dissent.

This means that among other things a member would be entitled to payment of fair value of his shareholding in case he decides to dissent from a proposed merger, consolidation, sale or transfer, redemption of his shares or an arrangement, provided the court permits.

“Uncertainty has been cleared…it should be pushed and made into law at the earliest, the decision has infused more confidence into the country’s investment scenario and interest of investors,” Lalit Bhasin, managing partner, Bhasin and Co told HT.

The bill has suggested company boards appoint a director to represent small shareholders. The role of independent directors would also be paramount to safeguarding the interests of all minority stakeholders, said legal experts.

“The bill is in the right direction but we need to wait and watch,” said Manoj Kumar, corporate law expert and managing partner, Hammurabi and Solomon. “There should not be any circumstance where the management forcefully comes up with a situation where minority stakeholders are forced to exit.”


Hindustan Times, New Delhi, 06-10-2012



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