{"id":2417,"date":"2022-03-30T08:49:28","date_gmt":"2022-03-30T08:49:28","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=2417"},"modified":"2022-03-30T08:50:51","modified_gmt":"2022-03-30T08:50:51","slug":"majority-powers-potential-abuse-of-powers-or-blessing-in-disguise","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/majority-powers-potential-abuse-of-powers-or-blessing-in-disguise\/","title":{"rendered":"Majority powers &#8211; Potential abuse of powers or blessing in disguise"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-2418\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/03\/WhatsApp-Image-2022-03-15-at-2.48.27-PM-1.jpeg\" alt=\"\" width=\"1000\" height=\"1000\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/03\/WhatsApp-Image-2022-03-15-at-2.48.27-PM-1.jpeg 1000w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/03\/WhatsApp-Image-2022-03-15-at-2.48.27-PM-1-300x300.jpeg 300w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/03\/WhatsApp-Image-2022-03-15-at-2.48.27-PM-1-150x150.jpeg 150w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/03\/WhatsApp-Image-2022-03-15-at-2.48.27-PM-1-768x768.jpeg 768w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2022\/03\/WhatsApp-Image-2022-03-15-at-2.48.27-PM-1-230x230.jpeg 230w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<p style=\"text-align: justify;\"><strong><u>MAJORITY SHAREHOLDERS:<\/u><\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li>Those who own more than 50% shares of the company.<\/li>\n<li>It is a cardinal rule of company law that evidentially all the resolutions are passed according to the will of the majority.<\/li>\n<li>Resolution of majority shareholders passed at a duly convened general meeting,is binding upon the majority and consequently upon the company.<\/li>\n<li>Hence, the Majority of the members enjoy the absolute authority, powers of the company and control its affairs.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong><u>EFFECTS OF MAJORITY POWERS WITHIN THE COMPANY:<\/u><\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li>Since majority members have absolute authority, they can misuse their power for their benefits and act against the interest of minorities.<\/li>\n<li>There are two very important limitations to the powers of the majority \u2013<\/li>\n<\/ul>\n<ul style=\"text-align: justify;\">\n<li>First, the powers of the majority of members are subject to the provisions of the Company\u2019s memorandum and article of association. A company cannot legally authorize or rectify any act outside the ambit of the memorandum of the company.<\/li>\n<li>Second, Majority must act within the provisions of the act or any other statute or constitute a fraud on the minority depriving it of its legitimate rights.<strong style=\"font-size: 14px;\"><u>\u00a0<\/u><\/strong><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong><u>PRINCIPLE OF NON- INTERFERENCE:<\/u><\/strong><\/p>\n<p style=\"text-align: justify;\">The principle of non-interference has been the best elementary principle in the field of company law<\/p>\n<p style=\"text-align: justify;\"><strong><em>FOSS V. HARBOTTLE<\/em><\/strong>.<\/p>\n<p style=\"text-align: justify;\">The court will not usually intervene in matters of internal administration and will not interfere with the management of a company so long they are acting within the powers conferred on them under the articles of the company. Court follows the principle of non-interference in the matters of the company if they are within the scope of memorandum or articles of the company.<strong><u>\u00a0<\/u><\/strong><\/p>\n<p style=\"text-align: justify;\"><strong><u>JUSTIFICATION:<\/u><\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li><strong><u>Recognition of the separate legal entity of the company<\/u><\/strong>:<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">If a company has suffered some losses and not the individual members, it is the company itself that should seek to claim compensation because the company is a legal entity separate from its members.<\/p>\n<ul style=\"text-align: justify;\">\n<li><strong><u>Preserve Right Of Majority To Decide<\/u><\/strong>:<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">The principle in FOSS V. HARBOTTLE maintains the concept of majority rule which provides the right to the majority to decide how the affairs of the company shall be conducted.<u>\u00a0<\/u><\/p>\n<ul style=\"text-align: justify;\">\n<li><strong><u>Multiplicity of inefficacious suits avoided<\/u><\/strong><strong>:<\/strong><\/li>\n<\/ul>\n<p style=\"text-align: justify;\">If every stakeholder were permitted to sue anyone who had injured the company through a breach of duty, there could be so many futile suits as there are shareholders. Legal proceedings would never cease, and there would bea wastage of time and money.<\/p>\n<ul style=\"text-align: justify;\">\n<li><strong><u>Suit filed by the minority is of no use if the majority does not wish it<\/u><\/strong><strong>:<\/strong><\/li>\n<\/ul>\n<p style=\"text-align: justify;\">If the irregularity of affairs of a companycan be subsequently ratified by the majority then Courts do not interfere in a matter which can be ratified by the majority. The court directs the shareholders to exhaust options for redressal within the company first before coming to the courts.<\/p>\n<p style=\"text-align: justify;\">This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. <a href=\"https:\/\/www.akgvg.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>AKGVG &amp; Associates<\/strong><\/a> does not intend to advertise its services through this.<\/p>\n<p style=\"text-align: justify;\">Posted by:<\/p>\n<p style=\"text-align: justify;\">CS Neetu Saini<\/p>\n<p style=\"text-align: justify;\">AKGVG &amp; Associates<\/p>\n","protected":false},"excerpt":{"rendered":"<p>MAJORITY SHAREHOLDERS: Those who own more than 50% shares of the company. It is a cardinal rule of company law that evidentially all the resolutions are passed according to the will of the majority. Resolution of majority shareholders passed at a duly convened general meeting,is binding upon the majority and consequently upon the company. Hence,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":2418,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120],"tags":[479,469,473],"class_list":["post-2417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-secretarial-services","tag-secretarial","tag-secretarial-audit","tag-secretarial-service"],"_links":{"self":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/2417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/comments?post=2417"}],"version-history":[{"count":3,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/2417\/revisions"}],"predecessor-version":[{"id":2421,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/2417\/revisions\/2421"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media\/2418"}],"wp:attachment":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media?parent=2417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/categories?post=2417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/tags?post=2417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}