Dissenting right, easy exit for minority shareholders

The Companies Bill 2011 introduced in the Lok Sabha on Wednesday seeks to protect and empower minority shareholders, who have often been neglected by the managements. Minority shareholders would be provided easy exit options and the right to dissent in case they wish to.

The Companies Bill 2011 introduced in the Lok Sabha on Wednesday seeks to protect and empower minority shareholders, who have often been neglected by the managements. Minority shareholders would be provided easy exit options and the right to dissent in case they wish to.

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This means 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.

“The bill empowers the small shareholders with options and they can now have the dissenters’ rights,” corporate law expert Manoj Kumar told Hindustan Times.
The bill also states that independent directors must particularly safeguard the interests of all minority stakeholders.

The bill has suggested company boards to appoint a director to represent small shareholders and thereby protect their interests.