Shareholder
jitender
(Querist) 30 June 2012
This query is : Resolved
dear members require your advice on a case.
All the directors of a public ltd company signed a registered contract with my client duly authorized by board resolutions. one shareholder having 28% of shares has now filed a civil suit for cancellation of that contract on the ground that the consideration received by the company is not as per the market rate. my query is that can a minority shareholder ask for cancellation of the contract against the company and my client?
case laws on the subject will be appreciated.
regards
J K Agrawal
(Expert) 01 July 2012
a share holder may be in Minority or in Majority, can not interfere the task of the Company as the entity of both are different.
Your agreement is with the Company and not with share holders.
If the Company is running under mismanagement the shareholder is having other remedies but he no power to set your agreement.
ajay sethi
(Expert) 01 July 2012
if company directors have acted in manner determiental to company interest and have mmisused the powers a share holder can question such a deal . he can move company law board under section 397 - 399 of companies act .
in addition he can also file complaint with the central govt to investigate affirs of the company . he can file petition before CLB for such order .
in the present case you cna raie the plea that shareholder can raise these issues before company law board . that deal is fair and no loss is caused to company
Pawan
(Expert) 02 July 2012
There are certain powers which necesarily be approved by special resolutions (3/4th majority). If the contract falls in any of them, it has to seek 75% shareholders approval.
Shareholders holding 10% or more shareholding may invoke minority shareholders rights for oppression and mismanagement.
CS Deepak Pratap Singh
(Expert) 02 July 2012
Dear Friend,As we know there is rule of majority, but in case of mismanagement and fraud minority members can apply to CLB now NCLT under Sections 397-399 of the Companies Act, 1956.In your case your the minority shareholder can apply against the contract but not by way of civil suit. He has to apply to NCLT under above referred provisions or to the Central Government for investigation into affairs of the company.
DR.VEDULA GOPINATH
(Expert) 06 July 2012
I AGREE ENDORSE THE VIEW THAT THE MINORTIY SHAREHOLDER CAN APPROACH CLB FOR RELIEF UNDER SECTIONS 397 AND 398 OF COMPANIES ACT
DR VEDULA GOPINATH
