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Powers of Minority Shareholders
10-Sep-2023 (In Corporate Law)
One of my clients had invested in a local FMCG Private limited company and is holding over 20% of the total equity in his name. As the client had experience and expertise in Cosmetic Exports, he also started working with the Company so that he had better grip on the day to day working of the Company. Lately the client found out that the promoters were indulging into unethical practices. In last 1 year they had taken a huge amount of Unsecured Loan in the books of the Company and used them for private purposes. Apart from the equity, the client has also given money for Working Capital needs. Salary and dues of the company are due for over 3 months. Vendors are not being paid after 3-6 months of their contracted credit period.
The Client is worried about his investment. Please guide on the recourse he has:
1) Being a Shareholder of the Company
2) Also being a Creditor in the books of the Company
Dear Querist,
1) Being a shareholder of the the company, an application under Section 241, 242 and 244 of the Companies Act 2013 is required to be filed before the concerned jurisdiction of National Company Law Tribunal (NCLT) enumerating the aforesaid oppression & mismanagement and accordingly seeking appropriate reliefs. However, one has to see whether the concerned shareholder holds atleast 1/10th of the issued share capital of the company.
2) If the company is unable to repay back the loan then the lenders would either recover it by selling the assets of the company or instituting multiple suits in the appropriate court of law.
However, if the shareholders take prompt steps then they can save the company from such undesirable circumstances.
For a further detailed opinion, please feel free to get in touch.
Regards,
Sohail Haque
1) Being a shareholder of the the company, an application under Section 241, 242 and 244 of the Companies Act 2013 is required to be filed before the concerned jurisdiction of National Company Law Tribunal (NCLT) enumerating the aforesaid oppression & mismanagement and accordingly seeking appropriate reliefs. However, one has to see whether the concerned shareholder holds atleast 1/10th of the issued share capital of the company.
2) If the company is unable to repay back the loan then the lenders would either recover it by selling the assets of the company or instituting multiple suits in the appropriate court of law.
However, if the shareholders take prompt steps then they can save the company from such undesirable circumstances.
For a further detailed opinion, please feel free to get in touch.
Regards,
Sohail Haque
Helpful?
21+
21+
Adv. Sohail Haque
Kolkata | 25+ Answers
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Perused your query. It may be noted that your client must record the above facts before the competent authority to avoid future liabilities. Please advise your client to file a case regarding oppression and mismanagement, and seek appropriate reliefs from the Court of Law. Please contact for more details.
Helpful?
20+
20+
Adv. Abhishek Dutt
Kolkata | 100+ Answers
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Disclaimer: The above query and its response is NOT a legal opinion in any way whatsoever as this is based on the information shared by the person posting the query at lawrato.com and has been responded by one of the Divorce Lawyers at lawrato.com to address the specific facts and details.
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