Corporate Governance: Protection of Shareholders' Rights in India

Company Law

“The organization through which corporations are directed and controlled”, according to the definition of corporate governance. Due to friction between agents i.e., managers and proprietors, the separation of proprietorship and control in productions with detached ownership structures underlines the agency issue (investors). In such a circumstance, the corporate governance mechanism’s goal line is to keep a check on administration and guarantee that it is working to enhance shareholder value. Howsoever, in India corporate governance complications are caused by a distinct agency problem that develops from a disagreement between dominant and minority owners. As a outcome, India’s corporate governance system should prioritize protecting minority shareholders from expropriation by dominant owners. There are rules protecting minority shareholders but they are either unproductive or poorly implemented. Correspondingly there is a substantial vacuum in the Indian corporate governance legislative system that dictates the strictest protections for minority shareholders’ interest. Policymakers may be able to do this by establishing a favorable climate and enacting legislation to safeguard their rights.

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