During the past decade, businesses have attracted rapidly rising institutional, retail and foreign investment. However, concentrated promoter ownership remains the basis of major company structures. As companies mature and successive funding rounds dilute founder control, protecting investor rights and minority shareholder interests becomes increasingly important.
Rajul Bohra
Partner
JSA Advocates & Solicitors
The recent class action brought by minority shareholders in Ankit Jain and Ors v Jindal Poly Films Limited and Ors before the National Company Law Tribunal (NCLT) is the first significant use of section 245 of the Companies Act, 2013 (act) since it came into force more than eight years ago. By challenging undervaluations of intra-group transfers and related-party dealings, the petitioners confirmed that minority shareholders have collective judicial remedies against corporate wrongdoing, rather than relying on individual or ad hoc oppression and mismanagement claims. The case reshapes practical enforceability, particularly as the SEBI has applied to be joined as a party after conducting its own enquiries.
Minority shareholder protection stems from the act. It provides substantive rights and remedies against oppression by controlling shareholders. Sections 241 and 242 allow members meeting prescribed statutory thresholds to apply to the NCLT for relief when the affairs of a company are conducted in a manner detrimental to their interests. Section 245 strengthens accountability by allowing class actions. These empower shareholders and depositors to seek collective relief against directors, auditors and advisers for fraudulent, negligent and oppressive conduct. Additional safeguards, such as the right to elect a small shareholder director under section 151 and provisions relating to fair exit pricing in takeover and squeeze-out situations, reinforce equitable participation and prevent conduct undermining minority rights.
Kartik Jain
Partners
JSA Advocates & Solicitors
In parallel, the 2023 amendment to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires periodic shareholder approval for special rights or board nominations. This prevents such rights from continuing in force without wider shareholder approval. The SEBI bolsters consent for restructuring transactions by making it compulsory for shareholders, including the minority, to approve the sale, lease or disposal of an undertaking that is not the subject of a court-approved scheme.
These amendments underline a shift towards participative, disclosure-driven governance. The SEBI SCORES platform provides a transparent and time-bound portal through which investors may raise and track grievances against listed companies and intermediaries. This curbs abuses of consolidated control, improves transparency of decision-making and enables minority shareholders to safeguard their interests. Where concentrated ownership once held sway with limited legal remedies for minority shareholders, a more balanced framework has evolved. However, work has still to be done.
The next phase of corporate governance evolution requires shifting from passive protection to the active empowerment of minority shareholders. Adopting eligibility standards and improving the disclosure of promoter-linked relationships will ensure the independence of directors. Creating an efficient digital ecosystem will enable meaningful investor engagement through simplified information, real-time disclosures and accessible shareholder-interactive platforms.
The judiciary must embrace consistency, with courts balancing commercial judgment against deference. Encouraging the adoption of stewardship principles and sustained engagement with institutional investors and proxy advisers will strengthen accountability.
Although the legal framework provides many statutory and regulatory safeguards for minority shareholders, their practical value has been limited. The class action provisions of section 245 of the act, for example, lay dormant until Jindal Poly Films. The act and the NCLT rules create procedural barriers for dispersed shareholders seeking collective relief. The SEBI observes that retail investor participation is restricted by low engagement and the limited use of grievance and voting platforms. The framework’s effectiveness depends on greater awareness, easier access and consistent enforcement.
Rajul Bohra and Kartik Jain are partners at JSA Advocates & Solicitors
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