Question

Majority powers and minority rights in company law

Answer 1

Usually the general rule is that the decision of majority shareholders in a company binds the minority. ... They misuse their power to exploit the rights of minority. In such a case a proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company.

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Answer 2

The majority rule and minority protection has gained entrant into our local enactment by reason of the provisions, majority rule principle though a bye product of the common law, as it developed as a creation of the chancellors, grew to the point that even though the courts could hold or so hold that as general rule it is only the majority shareholders of the company who could bring an action on the behalf of the company, the right of the minority was also sought to be protected. As the rule later turned out to also provide an exception to the rule, to the effect that minority shareholders in order to have their rights protected where the action of the majority appears to affect in a negative way the rights of the minority shareholders they have the right to sue in that instance.