tag:blogger.com,1999:blog-3202774368551476669.post6981479704391759340..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: Andhra Pradesh High Court on Reduction of Capital: More Uncertainty?Umakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3202774368551476669.post-13238099459891381242013-07-13T00:16:26.549+05:302013-07-13T00:16:26.549+05:30Can the shareholder though not eligible to file a ...Can the shareholder though not eligible to file a suit under section 399, file a Special Leave Petition in the Supreme Court?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-69077646079288957422010-09-05T21:09:34.188+05:302010-09-05T21:09:34.188+05:30The judgment is unclear on what needs to be done t...The judgment is unclear on what needs to be done to ensure that interest of minority is protected. The minority shareholders are not promoters of the Company nor are responsible for the management of the Company. This judgement also goes on to say that the Court can interfere in the business decisions that are taken by Board of Directors based on their professional wisdom. Squeeze out is permitted under the Companies Act by scheme of arrangement and therefore it does not use any words of limitation while defining arrangement under Section 391. If there is oppression or mismanagement, option has been given to shareholder under Section 397/398. If he does not fulfill the requisite voting power to file petition, he can still obtain approval of Central Government and file a petition for oppression or mismanagement. The Court in a Scheme of Arrangement has to only see if the scheme is fair and is not to suit particular shareholder/class of shareholder's interests or for collateral purposes and the valuation arrived at is in accordance with the guidelines and is fair. In my humble submission the Court cannot act as an appellate authority and do fact finding in the Scheme. It can only satisfy itself of fairness and not try to find out if shareholders lose money in the bargain. Since equity is an instrument involving risk, the holders of it must be aware of the loss they can incur. Minority should not dictate terms and command management of the Company. It is like tail wagging the Dog.Vijayhttps://www.blogger.com/profile/07310187931119187684noreply@blogger.com