Essay Sample on Majority Shareholders Dominating Minority: Legal Complications

Introduction

The article "the unending controversy over arbitrary use of power by majority shareholders as directors vis-a-vis the protection of the minority: the legal complications" address how majority shareholders and directors use their power to oppress the minority shareholder in a firm. The problem statement in this publication is to analyze whether there are remedies that could be found to aid minority shareholders from being dominated by directors and majority owners.

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This article illustrates what it means to be called a member of a company. It clarifies who a director is and his/her role in a company (Hornstein, 1950). The researcher documents further how majority shareholders colludes with directors to run the organization according to their own preference. A shareholder with the most shares will always have an advantage over the shareholder who has the least number of shares since votes are cast depending on the number of shares you possess. In other words, individuals who hold the most shares are the ones who control the business at all times. For this reason, the majority owners tend to oppress the people owning the least amount of shares.

The publisher discussed critical issues that affect all investor especially those who earn a minimum wage and invest all they have to buy shares from a firm and later own tend to gain losses because a sound decision was not made in the top management for the betterment of the company. As an investor with minimal share, your voice is not heard because you are a minority group. This article did not dive further into the remedies that are available for minority shareholder when they are being oppressed by rogue directors and majority shareholder.

In the articles, a case study that has been used on John Shaw & Sons (Saltford) Ltd V. Shaw, it provides remedies to the shareholder who do not find the board of director effective enough to run the business. They are given an option to either change their companies' law or not to re-elect the director who is not working to fulfill the goals and objectives of the shareholders. Though this change might favor both the majority and minority shareholder it may also be a way for the majority shareholder to prove their dominance over the minority shareholders (Nagar, Petroni, & Wolfenzon, 2011). The writer has not conducted clear research that will give minority shareholder remedies in case they are oppressed. The researcher only mentioned the Act that can be applied for the remedy but did not expound on it.

Conclusion

In general, this is an insightful article that gives information on how majority owners and directors dominate the minority shareholder. In the beginning, the article is quite straight forward but towards the end is where the author failed to give concrete details on the steps that a minority shareholder can take to secure his/her shares from directors and majority shareholder. Further research needs to be done to enlighten minority shareholders to better protect themselves from oppression from the dominate people.

Bibliography

Hornstein, G. (1950). Stockholders' Agreements in the Closely Held Corporation. The Yale Law Journal, 59(6), p.1040.

Nagar, V., Petroni, K. and Wolfenzon, D. (2011). Governance Problems in Closely HeldCorporations. Journal of Financial and Quantitative Analysis, 46(4), pp.943-966.