Shareholder Protection In M&A Deals: Legal Safeguards And Loopholes
- IJLLR Journal
- 3 days ago
- 2 min read
Jatin Pal, BBA.LLB, Law College Dehradun, Uttaranchal University.
Vatsal Chaudhary, Assistant Professor of Law, Law College Dehradun Faculty of Uttaranchal University.
ABSTRACT
Through an analysis of both statutory provisions and judicial interpretations, this research paper investigates the legal framework that governs the minority shareholder protection during mergers and acquisitions (M&A) in India. One important piece of legislation that ensures the interests of minority shareholders are protected is the Companies Act of 2013, which requires a 75% shareholder approval threshold for any merger or acquisition. The article describes how minority rights protection has changed over time and explains how Sections 241-246 of the Act can be used to address claims of mismanagement and oppression. When minority interests are threatened, the National Company Law Tribunal (NCLT) has the authority to step in and ensure that remedies like restrictions on share transfers and director appointments can be implemented.
This paper also compares India's protections with the international norms, pointing out that many developed jurisdictions take more proactive measures to protect shareholders, whereas India's approach is mainly reactive. By requiring the disclosures and closely monitoring merger activity, regulatory agencies like the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI) help to preserve a market integrity and transparency, according to the study. Notwithstanding strong legal frameworks, difficulties still exist, especially in international M&A deals where different legal requirements may expose minority shareholders to risks. In the order to improve the transparency and stop exploitation in the corporate world, this paper makes the case for continuous improvements in legal protections. It also suggests that the future reforms should concentrate on creating preventive measures and making sure that the enforcement mechanisms are effective.
