The Agency Problem of Majority v Minority Shareholders: The Way Forward in India

Abstract

Companies are considered to be microcosms of the countries and the society in which they operate. They are the collective institution of people having diverse interests but pursuing a common objective of growth and development of every individual involved. The rules dealing with corporate governance are not simply a matter of checks and balances but rather a mechanism through which increased customer satisfaction and shareholder value are achieved. Where numerous factors are considered while estimating a dynamic financial market, there’s one, in particular, that stands out. Countries that offer a legal framework to protect minority shareholders tend to have more robust markets because investors are more willing to take risks. The objective of this paper is to entice a wider debate on the issue of concentrated shareholding of the listed companies. This has been achieved by proposing some amendments in the law and also by suggesting to adopt certain solutions of various jurisdictions having a similar problem so as to incorporate better global corporate governance practices.