Rules of majority is applicable for all the companies which comes under the indian company act 1956

€ The shareholders pass resolution on various subjects either by simple majority or by 3/4th of the majority


The court in general will not intervene at the instance of shareholders in matter of internal administration and will not interface with the management of the company by its directors so long as they are acting within the powers conferred on them under the article of the company.

1.Where the act done is illegal or ultra-vires the company. A shareholders is entitled to bring an action against the company and its officers in respect of matters which are illegal or ultra-vires the company since no majority of shareholders can sanction such matters.

2. Breach of fiduciary duty. when a director is in breach of fiduciary duty, every shareholder may be regarded an authorized organ to bring the action

3. Where the act complained of constitutes a fraud on the minority. where the majority of a company·s member use their power to defraud or oppress the minority, their conduct is liable to be impeached even by single shareholder

Where an act which requires special resolution to be effective but has, in fact, been done by a simple majority. € where the personal rights of an individual member have been infringed. Infringement of a member·s individual rights like right to vote, right to receive dividends

€ A. B. C. D.

Protection under the companies act. 1956. Variation of class rights. Scheme of reconstruction and amalgamation. Oppression and mismanagement. Rights of dissentient shareholders at the time of take-over bids.


Ss397-399 and402. Ss397 provides that any member of a company who complains that its affairs are being conducted in a manner oppressive to any member may apply to the tribunal. 1. The affairs of the company are being conducted in a manner that prejudicial to public interest or to its members.

2. To wind up the company would unfairly prejudice to the member who have lodged the complain.


Ss399 specifies the persons who are entitled. 1. In the case of a company having a share capital, 100 members or 10% of the total number of its members whichever is less or members holding 10% of the issued share capital. 2. In case of a cos. not having share capital, 20% of the total members of its member.

€ a) b) c) d)

Ss 402 provides for the relief that can be provide by the tribunal and tribunal·s order . Regulation of conduct of the cos. Affair in the future. The acquisition of the shares or interests by the other of any members or by the cos. The consequent reduction of the share capital in case of (b). Termination, setting aside or modification of any agreement.


Setting aside of any transfer, delivery of goods, payment, execution or other act relating to the property made or done by or against the company within three months of the application.


Ss 408 empowers central government to nominate directors on the board of directors of a company to prevent oppression and mismanagement.

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