Legal Protection Of Minority Shareholders Research Articles

Juridical Analysis of Blocking Sabh Access In The RI Ministry of Minority Shareholders As a Form of Legal Protection of Minority Shareholders

Legal subject on a protection for minority shareholders is less attendance whether in the formulation of legal theories, or law making process in Indonesia. Prevailing laws and regulations are deemed unable to provide effective protection to legal interests of the shareholder minority. Apart from the right to file derivative action in accordance with Article 61 of Indonesian Company Law, there is a provision under Ministry of Law and Human Rights Decision No. 29/2022 that stipulating the protection to minority shareholder under dispute to file for blocking company's access to the Legal Entity Administration System on the Directorate General of General Legal Administration of the Ministry of Law and Human Rights of the Republic of Indonesia (SABH). The research shows that there is an impact when such a company's access to SABH is blocked, then such a company is denied to process business license; as a consequence of such integration between SABH and Indonesia' business licensing system that is centralized under the Online Single Submission system (OSS). When such company's access to SABH is blocked, access to OSS will also be blocked due to failures on verification process during login to OSS, and there will be notifications on OSS “Login Failed, Please Call SABH”. Thus, such companies are denied to process any business license within the OSS. Furthermore, the research shows there is a case that a minority shareholder who filed for SABH blocking, was charged for committing an unlawful act. For the sake of legal certainty, justification must be carried out for the implementation of protection to minority shareholder rights based on the provisions of the applicable laws and regulations, in this case as specified under PermenkumHAM 29/2022; in furtherance as impact from denied access to process any business license caused by such company's SABH blocked

Legal Protection for Minority Shareholders Arising from the Delisting of Issuer Shares (A Comparative Study of Indonesian, United States, and Singapore Law)

This research paper provides a comparative analysis of the legal frameworks governing the delisting of issuer shares in Indonesia, the United States, and Singapore. Using a normative legal research approach, supplemented by interviews with members of the Financial Services Authority (OJK) and a Member of the House of Representatives Commission XI, the study explores how each jurisdiction addresses the delisting process, particularly focusing on the protection of minority shareholders . The analysis reveals that Indonesia's legal system, influenced by its Civil Law heritage, contrasts with the Common Law approaches of the US and Singapore, especially in terms of shareholder involvement in voluntary delisting and the specificity of conditions for forced delisting. The study suggests enhancements to the Indonesian framework, such as clearer guidelines for shareholder approval in delisting decisions and more transparent criteria for forced delisting. These recommendations aim to improve the protection of minority shareholders within Indonesia's Capital Market.

Legal Reformulation of Derivative Action Regulations for Protection of Minority Shareholders in Indonesia: Comparative Study of Indonesia and Australia

Arrangements related to legal protection for minority shareholders regulated in Law no. 40 of 2007 concerning Limited Liability Companies (hereinafter referred to as UUPT) still found limitations both in filing rights to sue, objections, and implementation of derivative actions in terms of arrangements regarding the protection of minority shareholders due to a corporate action or certain decisions that take refuge behind the legality of the validity of the General Meeting Shareholders (GMS) whose enactment is heavily influenced by the interests of the majority shareholders. The existing arrangements are felt to be far from justice for minority shareholders. This study will examine whether the Derivative Action arrangements contained in the Company Law as a legal umbrella in providing protection for minority shareholders are adequate and how the legal systems are compared with regard to Derivative Action arrangements in Indonesia and Australia. The purpose of this study is to find out to what extent the Derivative Action regulations contained in the Company Law can protect minority shareholders and to compare the legal systems between the two countries as input and consideration for corrections and improvements to the national legal system. This research uses a type of normative research with a statutory approach and a comparative approach. The results of this legal research found certain aspects of the Australian Corporation Law which can provide a sense of justice and legal certainty as legal benefits for minority shareholders which can be used as legal reformulations in Indonesia.

Legal Protection of Minority Shareholders Through Derivative Lawsuits

One of the principles known in legal science is the principle of “majority rule Minority Protection”, this principle emphasizes that minority shareholders are considered for their interests and rights. This is because with a minority position, they tend to be less protected rights compared to majority shareholders. The legal protection of the majority shareholders is quite guaranteed, especially through the general meeting of shareholders (RUPS). While the protection of minorities this is a new thing and get less attention. The problem in this study is the regulation of legislation against minority shareholders in closed companies in Indonesia and how the legal remedies of minority shareholders related to violations of their rights. Law No. 40 of 2007 concerning Limited Liability Companies (PT Law) has stipulated that minority shareholders who are harmed due to members of the Board of directors making mistakes or negligence may file a lawsuit against the company (direct lawsuit) and file a lawsuit on behalf of the company (derivative lawsuit). This legal research used normative juridical approach. The data used were primary and secondary data which were analyzed using quantitative method. The results showed that the concept of derivative action provides a balance between effective recovery for shareholders on the one hand and on the other hand provides flexibility to the board of directors to make decisions that are free from shareholder interference. This concept is based on the principle that shareholders should not be involved in managerial matters within the company. In addition, the concept of derivative action plays a role in corporate governance, by providing a deterrent effect against members of the company's Board of directors or commissioners who commit irregularities or fraud. The court shall conduct a stage of testing or examination of errors that have been committed previously by the company concerned, if the company or the company is proven guilty then it can be summoned to a court which will thereafter be decided or tried, in court only accept and examine the derivative lawsuit, provided that the shareholders own at least 1/10 of the shares or 10% of the total number of shares with voting rights, if the commissioners and or directors make a mistake. Then it is considered effective if as long as the regulation is good and regulates certain existing or applicable laws. However, if as long as the court or shareholders see from the law does not match the existing regulations then it is said to be ineffective.

Family Ownership Concentration and Debt in Dividends Policies

This study aims to examine whether or not family control benefiting the internal and external governance mechanism to mitigate to agency problems affecting dividends in a capital market environment to improve investor protection such as Indonesia. The quantitative analysis model was used to test the hypotheses based on the panel data analysis of 58 family firms listed from 2012 to 2019, and the random effect technique (pooled EGLS). The findings indicate that internal governance mechanism (family ownership and family board representation) are irrelevant to the dividend policy. However, external governance mechanism (debt) negatively affects dividends. This means that debt plays a significant role in influencing dividend policies. In addition, it provides the issue from institutional setting, when legal protection for minority shareholders is improving, the governance role of families become less effective to monitor the firms.

Investment–cash flow sensitivity and investor protection

AbstractWe examine the role of country‐level legal investor protection (i.e., shareholder and creditor protection) on firm investment–cash flow sensitivity (ICFS). Using underexplored research data on investor protection across 21 countries and working with a conservative empirical design, we extend prior literature on the relation between investor protection and ICFS and provide new evidence on how these country‐level attributes interact to explain a firm's ICFS. We find that either the strong legal protection of minority shareholders or the strong legal protection of creditors reduces the sensitivity of investment to internal cash flow. However, in countries with strong levels of both minority shareholder and creditor protection, ICFS increases. Our results remain robust after controlling for several alternative explanations. The results support the argument that overregulation arises when policymakers increase investor protection at levels that lead firms to avoid external sources of finance, hampering firm investment. Our findings suggest that countries face a regulatory trade‐off such that increasing investor protection (either shareholder or creditors protection) enhances financial markets efficiency, but excessive regulation can indeed lead to financial markets inefficiencies.

Board independence and firm internationalization: a meta-analysis

Purpose Despite agency theory and resource dependence theory suggesting that – albeit through different mechanisms – board independence positively influences firm internationalization, empirical evidence on this relationship has been mixed and inconclusive. Based on this, the purpose of the present study is twofold: first, to analyze and synthesize the existing empirical literature and, second, to develop new theoretical insights on the effect of board independence on firm internationalization. Design/methodology/approach The authors used advanced meta-analytic techniques that allowed them, first, to synthesize the existing empirical literature on the board independence–firm internationalization relationship and, second, to examine the effect of several contingencies on such relationship. This study relies on data from 87 primary studies (published and unpublished) carried out in multiple academic fields in the period 1998–2021 and covering 49 countries. Findings The results confirm the established agency and resource-dependence arguments, suggesting that higher board independence is associated with greater firm internationalization. Moreover, the results show that the focal relationship is moderated by home-country formal and informal institutional factors, and in particular, the legal protection of minority shareholders and family business legitimacy. The authors do not find evidence that CEO duality and board size moderate the focal relationship or that board independence has a stronger effect on breadth than on depth of internationalization. Originality/value This study lies at the intersection of the literatures on corporate governance and firm internationalization and on comparative corporate governance of the multinational firm, shedding further light on the role played by institutional environments in determining the effectiveness of corporate governance mechanisms.

TINDAKAN HUKUM YANG DAPAT DILAKUKAN OLEH PEMEGANG SAHAM MINORITAS DALAM MELINDUNGI HAK SEBAGAI PEMEGANG SAHAM

Minority shareholders are part of an important element of a company. The continuity of work practices that occur often do not run according to expectations, the legal certainty received by minority shareholders is not the same as the majority shareholders who have enormous power in the company. Therefore, legal protection is needed to protect the rights of minority shareholders. In this study, the author uses a normative juridical research method with a statutory approach and also a conceptual approach. The author also uses legal materials or data obtained by the Library study method, with primary material in the form of laws and regulations, and also for secondary materials using research results with the same or related themes. The results of the research that the authors get are that legal protection for minority shareholders is still not guaranteed for sure, but there are various ways or actions that can be taken by minority shareholders in earning their rights in the company, one of which is asking for the rights to have their shares purchased at a reasonable price.

Perlindungan Hukum Pemegang Saham Minoritas PT (Persero) dalam Pembentukan Anak Perusahaan BUMN

BUMN (Persero) is regulated in UU 19 of 2003 on BUMN. BUMN hold 50% or more of share as a major controlled, the minority share can be owned by other parties with IPO mechanism. BUMN is including the subject of Law Number 40 of 2007 on Limited Liability Company, which specifically regulates the rights of shareholders. However, the problem is related to when the BUMN carrying out its business activities establishes a subsidiary based on the decision of the GMS, where the majority shareholder who is the largest shareholder is on the side of him, which makes the rights of the minority shareholder neglected. The purpose of this study is to analyze the pattern of protection for minority shareholders of Limited Liability Company according to Corporat Law system and the legal remedies of minority shareholders in protecting their rights to action. This research is a normative legal research with descriptive analytical research. The result of this study is that legal protection for minority shareholders of BUMN is regulated in BUMN Law and Limited Liability Company Law but there are the rights of these shareholders which are only fulfilled if they receive support from the majority shareholder, so that the sense of justice of minority shareholders is not protected. , however, there are efforts to settle disputes that can be taken both litigation and non-litigation, especially Acts against the Law (1365 BW) with the mechanism regulated in the Law on Company LawDOI: https://doi.org/10.26905/mlj.v2i2.7166

Minority Shareholders’ Legal Protection in a Limited Liability Company System

The purpose of this study is to determine the legal protection model for the majority and minority shareholders in public limited companies. This research method is normative research. To investigate the ineffectiveness of laws and regulations, in particular, Law No. 40 of 2007 on limited liability companies in providing shareholder protection, researchers have studied the laws and regulations and considered the views of experts on legal concepts related to legal protection for shareholders, particularly, minority shareholders. The results showed that the law did not provide maximum legal protection for minority shareholders, creating an imbalance between the rights of the minority and majority shareholders. For this reason, 1) reform or progressive changes in laws and regulations are needed, for instance, in PT Law No. 40 of 2007. These changes should be fundamental to philosophical aspects (values and perspectives) in providing shareholder protection; 2) the review of shareholders’ protection methods should be based on the aspects of fairness

Perlindungan Hukum Terhadap Pemegang Saham Minoritas Dalam Undang-Undang Perseroan Terbatas

The interests of minority shareholders in the company often conflict with a sense of justice and legal protection. This normative research discusses the issue of legal protection for minority public shareholders and the principle of justice in legal protection for minority shareholders. The legal protection of minority shareholders includes the right to propose a GMS (Article 79 paragraph 2 letter a), sue the board of directors (Article 97 paragraph 6) and the board of commissioners (Article 114 paragraph 6), request a company examination (Article 138 paragraph 3 letter a), and propose the dissolution of the company (Article 144 paragraph 1). The Company Law protects the rights of minority public shareholders based on the silent majority principle. The principle of justice to protect minority public shareholders is derived from the principle of distributive justice, the voting rights of minority shareholders are proportional to the portion of shares paid up, even though the equality is not equal. Judges' considerations regarding the legal protection of minority public shareholders are based on Article 138 paragraph (3) letter a of the Company Law, at least 1/10 of the total shares. Minority public shareholders are eligible to apply for an SLJ examination to the court. So that the minimum requirement of 1/10 of the total shares becomes a guideline to protect the rights of minority shareholders and as a derivation of the principle of distributive justice

Perlindungan Hukum Pemegang Saham Minoritas Terhadap Implikasi Praktik Insider Trading dalam Perdagangan Saham di Pasar Modal

The capital market is a means provided in order to find sources of financing and as a means of investment that involves all potential public funds, both those available domestically and those available abroad. This study uses a normative science study using a librarian study in the form of law and is assisted by primary data sources and secondary data sources. The results show that minority shareholders own less than 5% of the total shares traded in the capital market. Meanwhile, insider trading is a practice in which a corporate insider transacts securities using exclusive information that they have that is not yet available to the public. The position of Minority Shareholders regarding the practice of insider trading in trading shares in the capital market is the cause of the practice of insider trading. Therefore, legal protection for minority shareholders in the practice of insider trading in stock trading in the capital market is carried out by applying applicable laws and using the theory of legal protection by Philipus M. Hadjon.

Legal Protection of Minority Shareholders under Corporate Governance Process

In recent days, most of the corporate are failing in managing business effectively and the major cause for this is conflicts between majority and minority shareholders of the company which lead to direct or indirect destruction of business at the end. Even though, there are certain laws and provisions made for the sake of minority shareholders, those are enforced well and needs to make them as utmost safeguards to minority shareholders. In this paper, we will discuss the issues for conflict including rights of minority shareholders as well as roles and responsibilities of shareholders by analyzing possible solution for conflicts between majority and minority shareholder.

Abuse of Rights by Majority Shareholders in Indonesian Family-Owned Company: Is It Likely?

The familial relations entwining the ownership and management of a family-owned company creates a significant opportunity for majority shareholders to exercise their rights to others' detriment. Various jurisdictions have addressed such issue by projecting the concept of abuse of rights by majority shareholders (abus de majorité). The concept aims to detect which behaviour could be considered an abuse and provide legal protection for minority shareholders and companies. In Indonesia, however, such a concept has not been explicitly adopted nor discussed at length. This work examines what behaviour which could be considered as a form of abuse of rights by majority shareholders under the Indonesian company law, and how the protection and practice of Indonesian private company law against such behaviour. This work is a normative legal research using conceptual, comparison, statutory, and case-law approaches. The comparison and case-law approaches will be utilized to examine the universal concept of majority shareholders abuse of rights by examining the adoption of the concept in various jurisdictions and examine several relevant cases brought to the Indonesian court. As a result, it concludes that there are still problems surrounding the legal measures available, as this behaviour is still prevalent, especially in Indonesia's family-owned companies. Hence, more stringent rules are needed to protect minority shareholders and the Indonesian Company's interests effectively.

Legal Protection of Minority Shareholders (Acquisition Company in Indonesia and Malaysia)

The objective of research was to analyze the comparative legal provisions concerning the implementation regulation of the Legal Protection of Minority Shareholders in Context Acquisition Company in Indonesia and Malaysia. The journal is compiled with normative juridical research method with the approach of legislation, the conceptual approach and the approach of comparative law. Based on the survey results was revealed that basically the concept and criteria of legal protection of minority stockholders in the context of the acquisition of the same company. While suitability setting the position of trainee Shares Minority In Context Acquisition of Companies in Indonesia in accordance with the regulations but very difficult to implement because of the overlap with the rules above while in the Royal Malaysian implementation is very smooth due to the form of the rules in the form of legislation even though there are still gaps that need to be fixed in legislation there especially in the aspect that is still loose and often manipulated by the majority shareholders.

Minority Shareholders: Useful Idiots, Free Riders or the Achilles Heel of the Corporate Idea?

The shareholder is the basis of the corporate idea and framework. Corporate governance protects the rights of shareholders. But not all shareholders have the same power, control or ability to exert their responsibilities and rights. The plethora of legal, regulatory and statutory frameworks and initiatives that are in place to establish a balance of power and control within and beyond the formal organizational pyramid, do not take into account the power and the complexity of relations, alliances and strategies among shareholders, shareholders and managers or shareholders and other stakeholders. Furthermore, main corporate governance theories more or less ignore minority shareholders. They are considered as free riders, useful idiots or just supplemental capital to achieve the goals of the more organized or more powerful shareholders or managers. Their position and bargaining depend on ownership concentration and legal protection. Ownership domination and control are the borderlines of the corporate governance problems especially in Continental Europe corporate governance system. In Continental Europe corporate governance system, the issues or problems that are reported for the Anglo-Saxon system are different: asymmetry of information vs asymmetry of power and control, moral hazard vs moral control, adverse selection vs family loyalty, differences in motives (alignment of interests vs control entrenchment). The paper will address these differences and will argue that best practices as an easy way to uphold pretenses and the “comply or explain” in these circumstances leads to non-compliance and no explanations. Finally, the paper will try to answer the question: Who wants to be a minority shareholder in a corporation that doesn’t respect the rights of the individual shareholder or it is dominated completely? The consequences of the fallout or failure of corporate governance in Continental Europe system countries will be shown using the Folli Follie case in Greece. As a conclusion the paper argues that a new framework of corporate governance is needed for countries where ownership concentration is high and legal protection of minority shareholders is poor.

Perlindungan Hukum Pemegang Saham Minoritas Perseroan Terbatas Tertutup dan Keadilan Berdasar Pancasila

Legal protection for the majority shareholders is sufficiently guaranteed, especially through the mechanism of the RUPS, but this is not the case for minority shareholders, thus creating an injustice problem for minority shareholders. The purpose of this study is to uncover and find out legal protection for minority shareholders in a limited liability company based on Pancasila justice. This research is normative juridical so it uses secondary data with the law approach and qualitative data analysis. The results showed that the General Meeting of Shareholders did not reflect legal protection for minority shareholders, because in every decision making through the General Meeting of Shareholders and various other decisions based on the attendance quorum about the majority of votes present at the General Meeting of Shareholders. Such matter is detrimental to the interests of minority shareholders because without the presence of minority shareholders, a General Meeting of Shareholders can be held, while minority shareholders also have the same rights and obligations and responsibilities. The majority of shareholders hold a large and full control over the company, resulting in minority shareholders, there is no guarantee to get justice based on Pancasila justice. Therefore, the General Meeting of Shareholders must be held if attended by all shareholders with voting rights present or represented. If this is not the case, the results of the General Meeting of Shareholders may be canceled.

Exploring sustainable governance: Compliance with the Italian related party transactions regulation for the legal protection of minority shareholders

AbstractRegarding the development of sustainable governance systems, many regulators have issued and developed self‐regulatory codes defining the characteristics and ideal features of government models. The adoption of codes of good governance could serve as a mechanism to increase the level of legal protection for minority shareholders. Thus, this paper aims to measure the effective compliance by Italian listed companies with the Italian Code's recommendations on related party transactions and to assess the level of legal protection for minority shareholders in the Italian stock market. Using a quantitative method, our findings suggest that FTSE MIB companies are effectively compliant and that public utilities companies are as well. We also carried out an ordinary least squares (OLS) regression and found that companies with a higher market value and a greater presence of independent and non‐executive directors assure a higher level of compliance. We observed that widely held firms have a positive effect on the level of legal protection for the minority shareholders. Our paper contributes to enriching the sustainable governance models, and it is directed to academic and practical communities.

The Legal Protection of Minority Shareholders Under Ethiopian Law: Comparative Analysis

Business organizations are important to operate business activities that demand the involvement of many persons. In these days, therefore, business organizations are getting momentum in every sector of the economy. Business can be run in different forms of business organizations, one of which is a company. This article is to show the deficiencies of legal protection of minority shareholders under Ethiopian company law compared with the England and German company laws. Since Ethiopia commercial law is under the process of revision, this article will have a paramount importance and can be used as input for amendment of commercial code of Ethiopia. Thus, we tried to analyze specifically, the legal protection of Ethiopian law offers for minority shareholders by comparative perspective. It includes the rights of minority shareholders; the substantive protection of minority shareholders such as the right to call general shareholders meeting, right to propose resolution, right to challenge decision of the company, right to appointment of independent audit, right to access information and voting rights. The article finally ends up with some concluding remarks and the deficiencies of Ethiopian minority shareholders protection, if any, and lessons to be learned from UK and Germany laws would be reflected as recommendation to the Ethiopian commercial code. Keywords : Minority share holders, Protection of Minority share holders, Company law. DOI : 10.7176/JLPG/86-03 Publication date :June 30 th 2019

Does state ownership hurt or help minority shareholders? International evidence from control block acquisitions

Research SummaryWe argue that state ownership is a crucial policy instrument for alleviating what is perhaps the most important principal–principal (PP) agency problem around the globe: private benefits of control (PBC). Our results illustrate that states reduce PBC in the companies in which they acquire controlling ownership positions. We also examine how legal and political institutions influence the extent to which states accomplish this goal. Antiself‐dealing legal regulations make states more effective in their efforts to constrain PBC, while political constraints make them less effective. Regimes with high state capacity appear not to prioritize PBC reduction. We test and corroborate these ideas in a sample of 1,354 control transactions across 54 countries.Managerial SummaryThe one‐sided appropriation of wealth by dominant owners is arguably the biggest threat to minority shareholders around the globe. An important question that has thus far remained unaddressed is whether state ownership of firms increases or decreases the extraction of these so‐called PBC. By investigating a large number of transactions involving the transfer of corporate control in 54 countries, we find that state acquirers of controlling ownership positions generally respect minority shareholder rights more than other types of new controlling shareholders. This effect is stronger in countries with strong legal protection of minority shareholders. However, political constraints make it more challenging for state acquirers to keep PBC in check while “strong” states may (mis)use the firms they invest in as policy vehicles.