No majority, no matter how large, should take away the basic rights and freedoms of a minority group or individual. The principle of majority rule and minority protection. Majority rule and minority protection free download as word doc. Majority rule minimizes inequality when ei holds, mr always selects the candidate with the smaller gini coefficient. A proper plaintiff principle linus onyekeozurule nwauzi to show that a company is a complete legal entity. Under a simple majority rule, 50% plus one vote is needed to conclude a decision.
The members pass resolutions on various subjects either by simple majority or by special majority. This study examines the extent to which minority shareholders are. This fundamental principle of constitutional democracy, majority rule coupled with the protection of minority rights, is embedded in the constitutions of all genuine democracies today. The consolidation of states along linguistic lines. Thus the need to protect the minority members of the company and retreat from the precipice of the majority rule. Majority rule university of huddersfield repository. Madison relies on majority rule to protect against minority tyranny. Minority shareholders are not well protected by company law. The majority rule and minority protection has gained entrant into our local enactment by reason of the provisions made in the companies and allied matters act 1990, c20 lfn, 2004. Protection of minority shareholders rights international journal of. In a civil society, it is everyones responsibility to protect the rights of the minority, and this protection is often championed through political action by the nonprofit sector. The key shareholder remedies of derivative actions and oppression are comparatively discussed, with highlights of the similarities and differences in both remedies under canadian and. It does not mean that the majority has the right to practise oppression.
Majority rule but minority protection majority rule. Majority power has exquisite importance in the running of a corporation and the courts will now not generally interfere at the instance of the shareholder in matters of internal management. It is too easy, and almost too cheap, to attribute metro broadcastings emphasis on congress to justice brennans ability to build coalitions. Unlimited majority rule in a democracy is potentially just as despotic as the unchecked rule of an autocrat or an elitist minority political party. Pdf the principle of majority rule and minority protection.
Majority rule is limited in order to protect minority rights, because if it were unchecked it probably would be used to oppress persons holding unpopular views. Protection of minority shareholders in listed issuers. Jan 18, 2021 in the united states, several minority protections are built into the constitution. It is in the enlightened selfinterest of the majority to protect the rights of the minority because one day the majority will find itself in the minority. Consider the case where h 1 and l 0 and, as figure 2 indicates, 40% vote for a and 60% vote for b. Doc majority rule and minority protection david ejesu. Dahl argues that in cases where positive government action is required to protect rights, restraining majority rule with checks and balances undermines this protection.
Minority protection prevention of oppression and mismanagement under companies act, 1956 the rule of minority. The rationale for minority protection is difficult to ascertain, but vague notions of fairness or justice should be avoided for their lack. Chapter three nigerian legislation on the principle of majority rule and minority protectionas the principle of majority rule and minority protection made developmental stride and gained entrant into the different countries by way of local legislations, nigeria as a nation was not left alone in this regard. A reddish herring vuyani r ngalwana advocate of the supreme court of south africa i introduction our law looks upon companies as autonomous democracies in which the minority must abide by the will of the majority.
Laws have been formulated for the protection of the minority shareholders, however, these laws are. However, if the majority exercises its powers in the matters of a companys internal administration, then the courts will not interfere to protect the rights of the majority. Madisonian and millian principles safeguard individual and political minorities. Meaning that the proper claimantplaintiff is the company 3. Yet the framers were concerned that a powerful majority could violate the rights of the minority. Second, the act was designed to protect this newly won minority electoral strength from schemes designed to limit or reduce it. Apart form the protection afforded in the act7, the extent of the rights enjoyed by minority shareholders was first determined by the rule in foss v.
Accordingly, the statute prohibited covered jurisdictions. This study material is prepared for the use of students by. The courts intention has been to find an appropriate balance between majority rule and the protection of minority shareholder rights and interests. Little wonder we hear of democracy as being the government of the people by the people and for the people as defined by abraham lincoln. Rahmani, ataollah 2007 majority rule and minority shareholder. Frickey a modem prophet translated the biblical injunction to pos. Act 2014 are designed to protect minority shareholders against abuse at the hands of the majority. The majority rule and minority protection has gained entrant into our local enactment by reason of the provisions made in the companies and allied matters act 1990.
Jan, 2017 after all, a minority shareholding does not necessarily equate to a small shareholding, and a minority shareholder may have invested significant sums in a company. In order to evaluate whether or not, the rights of minority shareholders have been improved by the enactment of the companies act 2006, it is essential to analyse the situation of minority shareholders prior its enactment and determine whether under the old common law, minority shareholders were given adequate protection. Because of this reason, it has been said that the protection of the minority shareholders within the domain of corporate activity constitutes one of the most difficult. So they included provisions to protect the rights of the minority and to allow the minority to express its views on issues. Some shareholders of the company attempted to sue the directors and other shareholders for mismanaging and misapplying the companys property. Regardless of decisions determined by the majority rule, they cannot violate the rights outlined in a nations respective code or constitution. This document is highly rated by b com students and has been viewed 16815 times. In some cases where the majority shareholders have breached a fiduciary duty to a minority. It is known may 1952, dahl 1956 that majority rule is the only decision rule that completely respects political equality. No majority, no matter how large, should take away the basic rights and freedoms of a minority. Majority rules and minority rights cs executive company. The argument is that cycling ensures that parties that lose to a majority have an interest to remain part of the groups process, because the decision can easily be overturned by another majority.
In fact, however, these principles are twin pillars holding up the very foundation of what we mean by democratic government. So, to protect the interest of the minority law is always vigilant. Jun 11, 2018 majority rule presented a conundrum to the founders of america precisely because although majority rule was needed in order for the government to function and the principle of minority rule interfered with democracy, the majority in power could oppress a minority as easily as a king or dictator could. But there are several exceptions that allow minority shareholders to take their grievances to court. This provision is a codification of the rule in foss v harbottle. As the existence of the bill of rights illustrates, the majority has voluntarily agreed to limit majority rule in certain areas because some rights are so cherished that.
Majority rule is a way of organizing government and making public decisions. Protection of minority shareholders in specific contexts 34 section 1. Minority protection, rights, and supermajoritarianism. Under this definition, a unanimity rule would be an extreme form of supermajority rule. Reflections upon a reading of minority vote dilution. Chapter one introduction in global governance and administration, democratic principles are gaining greater momentum and taking its rightful place in most administrative processes of most polity. Apr 17, 2020 so the strict application of majority rule sometimes prove to be harsh and unfair for minority shareholders, therefore with the development of the corporate world, certain exceptions to this rule evolved for protection of rights of minorities. The majority rule of decision making, quite often than not overlooks the views of minority shareholders. In terms of minority shareholder protection, legislative provisions make use of broadbrush terms in order to leave scope for a wide range of conduct to potentially fall within their scope. Mcgann argues that majority rule helps to protect minority rights, at least in settings in which deliberation occurs. Some shareholders of the company attempted to sue the directors aye zlsg. Majority rule and minority protection the right of a member to bring a legal action to remedy an internal irregularity or a wrong committed against the company stems from the rule in foss v harbottle. Inequality and majority rule analysis oxford academic.
Dec 04, 2020 if the majority crushes the rights of the minority shareholders, then the company law will protect it. Majority rule and minority protection 1 section 3a cfrn. Exceptions to the foss v harbottle rule have emerged over time, reflecting the need to protect minority shareholders. Majority rule, minority rights principles of democracy. Therefore, the interest of the minority shareholders requires protection. This paper demonstrates that majority rule offers more protection to the worstoff minority than any other system, in that it maximizes the ability to overturn an unfavorable outcome. Role of securities supervisors and other regulators in the protection of minority shareholders 42 chapter v. Majority rule, minority rights, and the right to vote. In some cases where the majority shareholders have breached a fiduciary duty to a minority shareholder, the minority shareholder may be able to file a shareholder derivative action. Majority rule and minority protection in private corporations. This study examines the extent to which minority shareholders are protected against the. A proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company. Pdf the company act i960 merely incorporated the common law. The power to bring an action on behalf of the company is bestowed upon the members in general meeting and is obviously unavailable where dominant shareholders act against the wishes of minority shareholders and force proposals through.
As majority rule is used in matters of governance in both companies and strata title developments, there is a corresponding need for minority protection which is. In the corporate world, all democratic decisions and management of a company are made with the majority rule which is deemed to be fair. A supermajority rule requires some number greater than 50% plus one. These rights protect national, ethnic, religious, and other minorities from the tyranny of the majority. Rights of minority shareholders under companies act, 20. Whether majority rule in south africa has ever been an ethic.
The principle of rule by majority has been applicable to the management of the affairs of the companies. Pdf tn africa generally and nigeria in particular, it is a com111011 practice that communities and or families. I provide a simple illustration here and a general proof in the appendix. Majority rule and minority protection the right of a member to bring a legal action to remedy an internal irregularity or a wrong committed against the company. Protection of rights of minority shareholders the lawyers. Sem edo wire industries ltd1, which added an exception to the list of exceptions to the majority rule stating that the rule in. Will of majority is what decides public policy thru elections assumes that the majority will is right more that it is wrong to protect the minority will, laws are in place to protect the minorities from discrimination necessity of compromise. In order to evaluate whether or not, the rights of minority shareholders have been improved by the enactment of the companies act 2006, it is essential to analyse the situation of minority shareholders prior its enactment and. Majority rule and minority protection the right of a member to bring a legal action to remedy an internal. Majority rule, minority rights on the surface, the principles of majority rule and the protection of individual and minority rights would seem contradictory. Dec 29, 2017 majority rule and minority protection. For justice white to join the majority, then, it was important to stress that congress, not the commission, adopted the minority preferences.
How can majority democratic rule be reconciled with minority rights when the judiciary acts to safeguard the rule of law. The rights constitute the circumstances that pose exception. The majority rule principle though a bye product of the common law, as it developed as a creation of the chancellors, grew to the point that even though the courts. Majority rules and minority rights cs executive company law. Majority rule and minority protection virtue social institutions.
Majority rule and minority rights annenberg classroom. However, the only solution to majority tyranny given in federalist 10 is to have a large extended republic where a single cohesive majority would not exist, a solution completely compatible with majority rule. As the lure of nationalism grew, people who did not share the ethnic, linguistic or religious identity of the majority within their country were increasingly under threat. This thesis examines, in comparative terms, canadian and nigerian laws relating to the concept of corporate majority rule and minority protection from majority opportunism and oppression in private corporations.
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