Protecting interest of the minority Shareholders

This can be inferred by the judgment of the Supreme Court in Needle Industries Ltd.’s case and stated that in that case the petition under Section 397 of the Act was filed by a holding company, which obviously was a majority shareholder, complaining of actions by minority shareholders as oppressive. Therein the Supreme Court specifically considered the charge of oppression made by a majority shareholder against minority shareholders and did not dismiss the petition at the threshold on the ground that the petition under Section 397 of the Act could be filed only for an oppression of minority shareholders by majority shareholders. The fact that the petition was ultimately dismissed on the merits was immaterial and what was material was that the

A general phenomenon about the corporations is that shareholders must accept majority rule in a company. Shareholders who own majority of the shares, feel that they have right to make majority of all decision because they have more at stake. Minority shareholder can also participate in company affairs by checking majority shareholders power, and promote transparency, ethical practices and good governance (OECD, 2004) but they are often regarded as an unnecessary burden a “dead weight” in corporation (Shkolnikov, 2006)

The corporate governance debate has been a global phenomenon, attributed to the increasing deregulation of worldwide capital markets and the expansion of the shareholder class . Such changes have increased awareness of the importance of corporate governance practices,

Outsider dominated governance system is associated with the peculiarities of the national stock ownership. The market is characterized by very dispersed corporate capital. Population saves their money by investing in stocks and bonds of companies. Firms sell their securities to the investors to obtain additional funds for business expansion. The main owners of the companies’ capital are private and institutional investors. They are ready to take risks and focus on short-term goals of receiving income thanks to exchange rate differences. To make people invest in a

Control of a company is held to be in the hand of company directors and due to the degree of such control, fiduciary duties are imposed on them both under statue and common law provisions. The purpose of these duties are to ensure that directors exercise their power with reasonable care in the best interest of the corporation. Adherence to and compliance with these obligations is mandatory so as to hold directors accountable for their actions. The following essay will discuss whether or not the legislation is suitable and flexible enough or requires amendment with regards to Section 181 of the Corporations Act 2001(Cth) (‘Corporations Act’) and the approach to the interpretation of the terms ‘good faith’ or ‘best interest of the corporation’.

• LIABILITY – Stockholders personal assets are not subject to claims of creditors. The corporation itself is responsible for its actions and liabilities. • INCOME TAXES – Shareholders in a corporation are subject to “double taxation” as in first the corporation is subject to corporate taxation, then money is paid out in dividends. Which then is taxed again as personal income tax. • LONGEVITY - The life of a corporation is limitless as

The appointment of independent directors became very necessary, as shareholders looked for a way by which management became more responsible and accountable, and as such; the need for independent directors, who would not only checkmate the excesses of the board of directors, but also have the interest of the company and the shareholders at heart.

Shareholders holding minority interests in closely-held corporations are at risk of unfair or oppressive treatment8 by the majority or controlling shareholders, to an extent well beyond that of their counterparts in partnerships or in corporations whose shares are publicly traded.

While they have arrangement and discharging control over the directors of the enterprise, shareholders in expansive organizations, for example, the criminogenic Shell, Exxon, Occidental Petroleum, Union Carbide, Dow Chemical, Ford Motors, La Roche-Hoffman, BHP, A.H. Robins, General Electric, Johns-Manville, James Hardie, all enterprises whose disregard and willful dismissal of surely understood norms of conduct has brought about shocking mischief, have minimal impetus to guarantee that these supervisors carry on legitimately. This happens because financial specialists who don't lawfully own the property of the company used to do any harm, they have no individual legitimate obligation regarding any such damages brought about by the misapplication of that property. The rich shareholders who are continually telling the riches less and poor people to be responsible and in charge of the route, in which they act and live, are, in law, unreliable for the (regularly detestable) behavior of their companies. It deteriorates the

The idea of shareholder primacy dominates the business world today. An article from Harvard's school of business stated that shareholder primacy is so prevalent in the business to the mistaken fact that many individuals feel as though shareholders run the company from behind the scenes.This belief drives higher ups to run public firms with the great focus on raising the stock price. In the hope of maximizing shareholder value, this executive will sell key assets, fire loyal employees, and pressure the workforce that remains. Many individual directors and executives, Such as Lynn Stout, feel uneasy about these kinds of methods, stating that "a single-minded focus on share price may not serve the interests of society, the company, or shareholders themselves." The goal of this essay shows how and why Lynn Stout among other executives of corporate entities disagree with the idea of shareholder primacy.

The relationship among the many stakeholders and the way an organization is directed and governed is therefore created. Stakeholders might include customers, employees, creditors, suppliers and distributors, the community and the owners at large. The principle stakeholders are the board of directors, managements and employees. The first model of government and non-profit implementation often involves three groups: - executive board, supervisory board, and advisory board whose are appointed by shareholders to run the organization except the last group are bought in as independent experts to assist the company. Hence, what are good practices of corporate governance? How to ensure the directors act in the interests of the public?

Ownership of C corporation is represented by shares of the stock, or shareholders, it is the most common type of the business, where ownership to the shareholders offers a limited liability to all its owners.

This allows for the act of tunnelling, which is a way of directing company assets and future business towards core owners so they can retain control over the country’s corporate sectors with low cash flows. Tunnelling methods such as providing low interest rates, selling assets, lowering market prices, technology licensing and joint ventures, means dominant share holders can have the direct benefit of using retained earnings for personal gain at a minority shareholders expense, hindering their development in capital markets. Not only this, but growth has been linked to diversification, a consequence of expropriation, and its impact on organisational performance. However, this theory is conflicting because structural characteristics, resulting from family ownership, can decrease the popularity of business groups in terms of outside investors, and complex company linkages can relate to inefficient investment, unreliable accounting and possible inadequate managers through inheritance.

Corporate governance is a set of actions used to handle the relationship between stakeholders by determining and controlling the strategic direction and performance of the organization. Corporate governance major concern is making sure that the strategic decisions are effective and that it paves the way towards strategic competitiveness. (Hitt, Ireland, Hoskisson, 2017, p. 310). In today’s corporation, the primary objective of corporate governance is to align top-level manager’s and stakeholders interest. That is why corporate governance is involved when there is a conflict of interest between with the owners, managers, and members of the board of directors (Hitt, Ireland, Hoskisson, 2017, p. 310-311).

Nevertheless if companies operate in weak markets and fail to create growth and profit the concept of maximization of shareholder wealth is also an opportunity for self-regulation and security against threats for a company. This approach is in particular useful for safeguarding against difficulties arising from wrong or misguided leadership within a corporation. Shareholders of a company have the strongest interest in a company’s success because they often invest a lot of capital in the business and require revenues for their deposit (Moore, 2002). As a matter of fact, they become more