EXCEPTIONS TO ‘THE RULE IN FOSS V. HARBOTTLE’: INDIAN CONTEXT
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https://doi.org/10.55662/Abstract
‘In a democracy you indeed have to win by a majority’. Likewise, a company which is an association of individuals acts in accordance with the decisions taken by the majority of its members. The dissenting members i.e. minority (if there is one) is bound by the decisions unless and until they are able to show that the power, which vests with the majority, has been abused or prejudices the interest of the company. The members of a company can express their wishes at general meetings by voting for or against the resolutions proposed. However, the resolution binds all the members, even those who vote against it.
The protection of the minority shareholders within the domain of corporate activity constitutes one of the most difficult problems facing modern company law. The aim must be to strike a balance between the effective control of the company and the interest of the small and individual shareholders. Similarly, in the words of Palmer: “A proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company.”
The Companies Act, 2013 therefore, contains a large number of provisions for the protection of the interests of investors in companies. The aim of these provisions is to require those who control the affairs of a company to exercise their powers according to certain principles of natural justice and fair play.
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