Question

In the landmark case Tata Sons Limited v. Cyrus Mistry

Q: Answer-In the landmark case Tata Sons Limited v. Cyrus Mistry (2018), the Supreme Court addressed the right...

In Tata Sons v. Cyrus Mistry, the Supreme Court held that majority shareholders owe a fiduciary duty toward minority shareholders, similar to directors duty toward the company. The judgment established that oppressive conduct by majority shareholdersconduct that unfairly prejudices minority interestscan be remedied under Section 398 of the Companies Act oppression. The Court clarified that while majority has governance rights, these rights must be exercised in a manner that does not illegally or oppressively harm minority interests. This landmark decision has become foundational in protecting minority shareholder rights and establishing the principle of shareholder rights balance.

(2018), the Supreme Court addressed the rights of minority shareholders and the concept of fiduciary duty owed by majority shareholders. The Court established principles regarding oppression and mismanagement under the Companies Act. Which principle was established?

A Majority shareholders have absolute rights over company affairs and minority shareholders have no remedy for oppression.

B Majority shareholders owe a fiduciary duty toward minority shareholders, and conduct that oppresses minority rights can be challenged under oppression provisions.

C A director cannot be removed even if their removal is in the company's interest if the majority opposes removal.

D Minority shareholders cannot seek relief for mismanagement unless they own at least 25% of shares.

E The controlling family of a company cannot make decisions contrary to company's interest if minority shareholders object.

Practice Next