Minority Shareholder Rights 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

How does the heterogeneity of institutional investors influence corporate tax avoidance? The moderating role of family ownership

PurposeThis study provides new insights into the relationship between the heterogeneity of institutional investors (IIs) and corporate tax avoidance (CTA). It also investigates whether family ownership moderates this relationship.Design/methodology/approachBased on a sample of 200 French-listed firms from 2008 to 2017, we use the generalized method of moment (GMM) estimator proposed by Arellano and Bover (1995) and developed by Blundell and Bond (1998) to address endogeneity and omitted variable concerns.FindingsThe results show that passive IIs are associated with an increase in the level of tax avoidance. However, active ones significantly decrease the levels of tax avoidance practices. Moreover, we show that institutional activism is not sufficient to control managerial actions, particularly in the context of controlled family businesses. The results suggest that families may expropriate the rights of minority shareholders through a controlling coalition with passive IIs.Research limitations/implicationsThis study has several practical implications. First, the results are useful for policymakers who should constrain passive IIs to provide only one service (asset management). Second, this study may sensitize family owners to the need to cooperate with active IIs that are effective in monitoring the firm. In particular, families should be willing to sacrifice some of their socioemotional wealth to promote a balanced ownership structure, which is important for responsible and effective corporate governance.Originality/valueThis paper extends previous research by investigating the heterogeneity of IIs in terms of horizon, ownership and control. In addition, this paper sheds a new light on how family firms behave regarding tax avoidance practices in the presence of active and passive IIs.

Pledging of shares by controlling shareholders and implications for foreign institutional investors

Offering shares as collateral—that is, share pledging—to avail business or personal loans has increasingly been used as a financing tool by controlling shareholders in developing economies such as India. With the focus on protecting the rights of minority shareholders, pledging of shares has been subject to scrutiny as academicians, regulators, and corporate governance experts have highlighted the detrimental effects of share pledging on the firm. This study raises awareness about share pledging for uninitiated foreign institutional investors (FIIs) looking to invest in developing economies. The study highlights the conditions, including motivation to pledge, degree of ownership, and quantum of pledge, under which share pledging may be appropriate and when it may benefit the FIIs. We distinguish between pledging under different conditions and the implications arising under the outlined scenarios for FIIs. Our analysis provides potential investors with a comprehensive overview of pledging and of its possible consequences for the firm. The study urges investors to take a more nuanced view of pledging rather than painting all of it with the same negative stroke.

Minority shareholders and tax avoidance

This paper examines whether and how external country-level corporate governance devices affect corporate tax avoidance. Using a panel of public firms across 33 countries, I show that laws empowering minority shareholders hinder corporate tax avoidance, consistent with shareholder protection laws spilling over to tax avoidance through reduced income diversion. I corroborate the validity of these findings using a major corporate governance reform in Italy. In cross-sectional tests, I further document that firms in countries with stricter transfer pricing rules and stronger tax enforcement reduce tax avoidance to a larger extent. Finally, through path analysis, I provide evidence consistent with firms shifting less income to foreign countries in response to stronger minority shareholder rights. Overall, these findings suggest that minority shareholder protection laws can safeguard outside investors and the government against expropriation by insiders.

Principles of Good Corporate Governance in Conflict of Interest Transactions between Public PT and Minority Shareholders

The research entitled Good Corporate Governance Principles in Conflict of Interest Transactions Between Public Limited Companies and Minority Shareholders aims first to know and understand and analyze the arrangements related to the implementation of good corporate governance principles towards minority shareholders. Second, to know, understand and analyze conflict of interest transactions that occur between publicly listed public limited companies and minority shareholders. The research method used in this thesis uses Normative research methods which are library research, namely research on laws and regulations and literature related to the material discussed. Based on the research results, it can be concluded First: the principles of good corporate governance in conflict of interest transactions between publicly listed public limited companies and minority shareholders. Decisions in the GMS made by the majority are not entirely fair to minority shareholders. Conflicts of interest that occur in the Company are often detrimental to the interests of minority shareholders. Second: shareholder protection is still not properly implemented by the board of directors because it violates the principles of fiduciary duty and statutory duty. This can be seen from the violation of the rights of minority shareholders, namely the failure to conduct an assessment, the failure to disclose information and the failure to hold an Independent GMS. On the other hand, OJK through its authority has protected the interests of minority shareholders by imposing administrative fines.

Protection of the Minority Shareholders in Company Law Regime

This comprehensive article explores the critical role of minority shareholders and the legal frameworks and mechanisms established to protect the interests and rights of minority shareholders within the realm of company law and corporate governance. Minority shareholders, despite their smaller ownership stakes, hold a substantial influence in maintaining the equilibrium of power, ethical conduct, and financial integrity within the corporations. The safeguarding and empowerment of minority shareholders within the expansive domain of company law are not just legal obligations but also the basic ethical principle of corporate governance. This article engages in an exploration of the complex mechanisms and prosperous legal provisions designed to ensure the protection, participation, and prosperity of minority shareholders within the vast realm of company law and it also into understanding the role of minority shareholders as guardians of corporate democracy provides a foundation for appreciating their influence in the corporate world. The Minority Shareholders are not just shareholders but they are also the advocates for ethical conduct, transparency, and accountability of the Company. The neglect of the protection of the minority shareholders within a company can result in a range of adverse consequences, and the article explores the negative effects of not safeguarding the rights and interests of minority shareholders, including the erosion of trust and confidence, reduced investment, and diminished market value. The article highlights the paramount significance of these safeguards, examines the complexities of regulatory architecture, navigates potential challenges, and provides an exhaustive understanding of the comprehensive and evolving protection, rights, and opportunities extended to the minority shareholders in modern corporate governance.

Legal Issues Arising from Comcasts Acquisition of DreamWorks and Oriental DreamWorks

Comcast Corporations acquisition of DreamWorks Animation SKG Inc. in 2016 presents a case study of the legal complexities involved in the merger and acquisition legal framework in the United States and China. This paper explores the different aspects of this acquisition, including antitrust regulations, cross-border legal issues, minority shareholder rights, intellectual property management, and post-acquisition integration. Antitrust concerns and foreign regulations, such as Chinas Anti-Monopoly Law, play a significant role in this case which highlights the necessity of compliance with regulatory frameworks to avoid penalties and legal disputes. The importance of protecting minority shareholders' rights in an acquisition is demonstrated by the lawsuit filed by AACERS against DreamWorks CEO Jeffrey Katzenberg. The need for transparency, fairness, and fulfilling fiduciary duties is crucial to mitigate the risk of legal conflicts. This paper also includes the transaction of intellectual property assets. Evaluate the post-acquisition integration procedure, including management restructuring, marketing strategy, and layoffs, with a focus on the necessity of dispute resolution and maintaining compliance with the relevant laws and regulations. Overall, the acquisition of DreamWorks Animation shows some valuable insights and experiences of the legal complexities of an acquisition that involves a cross-border company. Companies can accelerate the acquisition process and integrate smoothly after the acquisition by carefully considering these legal complexities before making the deal.

How Does a Regulatory Minority Shareholder Influence the ESG Performance? A Quasi-Natural Experiment

Based on China’s newly established Securities Investor Services Center (CSISC), a minority shareholder protection mechanism, we investigated how the CSISC shareholder influences the ESG performance of listed companies. Using a difference-in-differences analysis for a sample of Chinese listed companies during 2013–2017, we found that the pilot reform of CSISC shareholding has a positive influence on the ESG performance of listed companies. We also found that this effect exists in large companies and in companies in non-high-polluting industries. Besides, analysts’ attention, external auditing quality, institutional shareholding, and highly-developed market intermediary and legal systems can strengthen the effect of CSISC shareholding on corporate ESG performance. Our findings inspire regulators in emerging markets to establish suitable mechanisms to protect minority shareholder rights in the long run.

Free Float in the Polish Capital Market and Its Importance for Investors

Theoretical background: Free float (hereinafter referred to as FF) refers to the ratio of shares held by small investors (less than 5%) to all shares in a company. FF investors are generally unrelated to each other or to ma-jor shareholders and they constantly review the company’s current stock market valuation and thus improve the stock market efficiency. This means that the higher the FF, the potentially higher liquidity and better valuation of the company’s shares. A low FF recalls the institution of protecting the rights of minority shareholders, calls into question the sense of maintaining a public company status, and raises the potential risk of incorrect valuation. The literature generally lacks studies referring to all these issues as well as FF statistics in Poland. Purpose of the article: The purpose of the article is to sum up the term “free float”, analyze FF statistics on the Polish capital market, indicate the link between FF and market liquidity, identify potential risks associated with listed companies having low FF and to determine whether it makes sense for the strategic investor to maintain public company status with low FF. Research methods: Theoretical analysis (including analysis of capital market laws) and statistical analysis. Main findings: The research confirmed that the relationship between FF and stock market liquidity is positive, but only considering FF in nominal terms. On the Polish capital market, as the nominal level of FF increases, market capitalization and trading liquidity increase largely and the average market spread decreases slightly. The article also points out important risks associated with low FF conditioning low liquidity, such as the risk of stock manipulation and the risk of incorrect company valuation. Potential areas for changing the law on squeeze-out/sell out institutions due to the inadequacy of the FF percentage were also pointed out.

The institution of mandatory offer as a means of protecting the rights and interests of shareholders

the authors conclude that the institution of mandatory offer has been a part of the Russian legal order since the adoption of the Federal Law No. 208-FL "On Joint Stock Companies" on December 26, 1995. The authors note the legal problems of protecting the rights of minority shareholders within the framework of a mandatory offer, and also reveal the legal regulation of this institution in the laws of the USA, Great Britain and Russia and determine the legal nature of mandatory offer as a means of protecting the rights of shareholders.

Legal Autocracy in Corporate Democracy: Minority Shareholders Rights

Legal Autocracy in Corporate Democracy: Minority Shareholders Rights

Public Listed Companies Takeovers Comparison Under Indonesian and Malaysian Law

The current condition of business competion is getting tighter. This causes the company to compete to maintain its existence. One way to do that is by restructuring the company. Takeover is one type of corporate restructuring. Takeover is a legal action carried out by a legal entity or individual to take over company shares resulting in a transfer of control over the company. The purpose of this legal research is to increase knowledge in the field of public listed companies takeovers based on Indonesian and Malaysian Law which can be benefit to legal practitioners. This research is a normative legal research using statutory and comparative approach. The data used in this research is secondary data. The results of the study are a public listed company that undertakes a takeover in not only subject to the laws and regulations regarding limited liability companies, but also must comply with the provisions of the capital market laws and regulation. After the takeover process occurs, the expropriating party must carry out a mandatory tender offer process. There are differences in terms of public listed companies takeover process between Indonesian and Malaysian Law including the requirements to become a new controller, minority shareholder rights, and takeover’s impact regulation on business competition.

Дослідження впливу кваліфікуючих факторів на інвестиційно-інноваційні процеси в умовах сучасних викликів

This article explores the influence of qualifying factors on investment and innovation processes in the face of modern challenges. The influence of Ukraine's positioning in world rankings on the dynamics of investment and innovation processes is determined, which determines the degree of confidence of a foreign investor and highlights the main obstacles to the formation of an innovation-active environment within the country according to the structural components of the indices. Attention is paid to the scientific discussion of the issue of protecting the rights of minority shareholders, which has become aggravated with the implementation of the principle of liberalization of the Ukrainian financial market. The tendencies of the increase in the cost of borrowed resources within the country in connection with the policy of inflation targeting are considered, which reveals the difference between the planned and actual inflation target, since an increase in the discount rate is a managerial lever for reducing inflation. Attention is focused on a fairly high share of NPL loans in the structure of the loan portfolio of commercial banks, which necessitated improving access to credit information through the creation of a new public credit registry based on the NBU. The need has been identified for increasing the volume of the resource base, in particular with increasing the share of external sources of financing, which will help ensure competitive conditions for the implementation of the financial and economic activities of national producers. The expediency of introducing managerial financial and economic levers for the development of medium- and long-term financial instruments in the context of financing investment and innovation processes is substantiated.

POLITICAL CONNECTION, FOREIGN INSTITUTIONAL INVESTORS AND TUNNELING: EVIDENCE FROM INDONESIA

The purpose of this study is to examine the moderating effect of foreign institutional investors on the relationship between political connection and tunneling. To achieve this goal, our study has examined all companies listed on the Indonesia Stock Exchange between 2015 and 2019, and obtained 1,571 firm-year observations. By using a quantitative approach and data analysis using moderated regression analysis, the results of this study indicate that foreign institutional investors play a role in weakening political connections to tunneling. This shows that foreign institutional investors have a role in reducing tunneling. These investors influence the behavior and performance of the company, so, even though the company has political ties, foreign institutional investors are less susceptible to political pressure and are more likely to negotiate to enhance the interests of minority shareholders, and protect their reputations. This finding has important implications for regulators to consider when evaluating the Investor Protection Act, in particular the protection of minority shareholder rights in companies with political ties.

A Commentary on Shareholder Derivative Litigation under the Companies and Allied Matters Act of Nigeria 2020

On 7 August 2020, the President of the Federal Republic of Nigeria assented to the Companies and Allied Matters Bill which culminated in the Companies and Allied Matters Act of 2020. The new Act repeals the Companies and Allied Matters Act of 1990 which had been in operation for thirty years. The Act contains provisions that regulate the right of a party to institute an action for harm caused to a company by majority shareholders or directors, a principle of corporate law widely known as derivative suit. This article, therefore, examines the provisions of the Act. It argues that, unlike the 1990 Act, the provisions of the 2020 Act have achieved significant milestones in enhancement of the rights of minority shareholders, companies, directors and the roles of courts in shareholders’ derivative litigation. However, there are gaps in the Act which may threaten the utility of derivative suits in corporate governance in Nigeria. The article suggests a hybrid of reforms to the Act and useful guides to courts that will be beneficial to shareholder applicants, directors and corporations in derivative litigation.

The effects of financial constraints on the market value of cash in a mandatory dividend context

AbstractThis article aims to shed light on the effects of financial constraints on the value shareholders attribute to cash holdings in firms listed on the Brazilian stock exchange, where corporate law determines that publicly listed companies set aside part of their annual profits for dividend payments. While prior empirical literature provides evidence that cash holdings are more valuable for financially constrained companies than for their unconstrained counterparts, we cannot support the hypothesis that the market value of cash increases as obtaining access to external funds becomes more difficult. Our analysis also reveals that constrained companies do not hold significantly higher cash savings than their unconstrained peers. This last result, in turn, is not in line with the precautionary motive for having cash. Moreover, although the principal argument for adopting mandatory dividend rules in Brazil was to increase the protection of minority shareholders, we observe that the contribution of cash holdings to firm value is still small in Brazil, especially in dual‐class companies, because investors expect cash holdings to be partly consumed as private benefits due to the presence of significant agency problems. This research is relevant because it serves as an additional step in understanding how a legal mechanism established by a government to protect investors affects the contribution of cash holdings to firm value. Governments that intend to adopt mandatory dividend rules to safeguard the cash‐flow rights of minority shareholders can use our findings to make better decisions regarding whether to enforce compulsory dividend payments.

Importing activists: Determinants and consequences of increased cross-border shareholder activism

We analyze nearly 7,000 shareholder activist campaigns across 56 countries and show that shareholder activism is now a global phenomenon. Our analyses provide evidence on factors that explain the spread of activism and two related questions. First, we measure the extent to which country-level governance regulations facilitate shareholder engagement, a necessary condition for activism, and show that our measure of shareholder-empowering governance regulation explains cross-country variation in the emergence of activism. Second, we show that changes in these regulations also affect outcomes for firms that face a high threat of activism but that are not targeted by activists (i.e., there are spillovers)—including increased profitability, higher payouts, and reduced investment. These effects are most pronounced in countries with weak minority shareholder rights, where activism had previously been relatively unimportant.

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

BUMN (Persero) is regulated in Law Number 19 of 2003 concerning BUMN. In practice BUMN (Persero) is subject to Law Number 40 of 2007, which regulates the rights of shareholders. However, when the Persero BUMN established a subsidiary based on a GMS decision, where the majority shareholder sided with it, which made the rights of minority shareholders neglected. The aim of the research is to analyze the pattern of protection for minority shareholders of PT (Persero) according to the corporate legal system and legal remedies for minority shareholders in protecting their rights to action. This research is normative legal research with the nature of descriptive analysis research. The results of the study are that legal protection for BUMN minority shareholders is regulated in the BUMN Law and the Limited Liability Company Law, but there are rights of minority shareholders which are only fulfilled if they receive support from the majority shareholders, so that the sense of justice for minority shareholders not protected, but there are efforts to resolve disputes that can be pursued both through litigation and non-litigation, especially Unlawful Acts (1365 BW) with the mechanism stipulated in the Company Law.DOI: https://doi.org/10.26905/mlj.v3i1.7930

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.

LATVIAN APPROACH OF RECOGNISING THE INTEREST OF THE GROUP. IS THERE A NEED FOR AMMENDMENTS?

The relevance of this study is that Latvian Group of Companies Law focuses on creditor and minority shareholder protection, less concerned with pursuing the interest of the group. That raises the question of whether centralised management can be incorporated. Additionally, creditor and minority shareholder protection are exposed to specific issues. The limited scope of the duty to compensate the losses of an accounting year, absence of direct liability of the parent company and difficulties to determine disadvantageous transactions and other detrimental measures are concerns in creditor protection. Minority shareholder protection has been criticised regards future profits, an amount payable for indemnity and a mechanism applicable for calculation for the redemption of stocks (capital shares). The main problems identified in the research paper: are the effectiveness of the establishment of centralised management; direct liability of a parent company; exit and buy-out rights of minority shareholders. The research paper undertakes the following tasks: 1) to examine a parent company’s right to give instructions in Group of Companies Law; 2) to analyse a parent company’s and its lawful representative liability in Group of Companies Law; 3) to examine minority shareholder protection, which is not members of the group, in Group of Companies Law; 4) to compare results of previous tasks with German and Portuguese group law and French Rozenblum doctrine. The research paper concludes that there is no need to amend the Group of Companies Law because exposed inefficiencies can be fixed by advancing case law. Moreover, the research paper proves the effectiveness of the German model of group law. The novelty of the analyzed topic is manifested in the fact that there is a shortage of case law and the present literature on Group of Companies Law does not cover the issue of the recognition of the interest of the group. The methodology will be that of legal doctrinal research, legal theory method, the reform agenda research and comparative analysis.