Reduction of Share Capital: What concerns does it raise for Minority Shareholders?

Abstract

This research paper is going to discuss in detail about the Legal framework pertaining to Reduction of Share capital both in India as well as other foreign jurisdictions such as USA, United Kingdom and Singapore. The paper will discuss the current legal framework in India pertaining to Reduction of share capital and also the level of protection afforded to the Minority shareholder by the companies and securities legislation in India. The paper shall conclude by suggesting the possible reforms which can be made in this area so that maximum protection is given to Minority shareholders and at the same time value enhancing reduction is given a green signal. The main intention behind this paper is to create awareness about the legal implications of reduction of shares and the hardships faced by Minority shareholders in India. The research identifies that the current legal scenario is a bit tilted towards the Controlling shareholders and this paper rightly provides solutions as to how the law can be changed for the good and for the betterment of the Investors. This paper provides solutions which has somewhat been borrowed from the West and other Asian countries but at the same time provides the problems which can be there in implementing the same if it is not sufficiently Indianised and also tries to provide further solutions for the same. This research work goes beyond the available literature and provides effective solutions to counter such problems since this area of company law has attained practical significance due to the hardships faced by minority shareholders.