Balancing the scales: Empowering minority shareholders in India's insolvency landscape
insolvency landscape, a pivotal conversation emerges about striking a harmonious balance to empower minority shareholders while navigating the complexities of insolvency restructuring.
This calls for a robust framework that safeguards all stakeholders and amplifies minority voices. The Insolvency and Bankruptcy Code, 2016 (I&B Code/Code) has revolutionised insolvency resolution via the Corporate Insolvency Resolution Process (CIRP), focusing on efficiency and stakeholder protection.
However, the minority shareholders' concerns remain overshadowed. This article explores the imperative of empowering minority shareholders within the I&B Code framework, spotlighting actionable measures for a fair and balanced insolvency ecosystem.
Concept of minority shareholders in light of insolvency framework
In the context of an insolvency framework, minority shareholders are individuals or entities holding a relatively small portion of a company's equity, typically not exercising significant control over the company's management or decisions.
These shareholders are distinct from the majority or controlling shareholders, such as the company's promoters, key managerial personnel (KMP), and their immediate relatives, who hold a significant stake and often play a dominant role in the company's operations. These shareholders typically include retail investors, institutional investors, non-promoter public equity shareholders, and any other non-promoter entities holding shares in the company.
Proposed protection by the Securities and Exchange Board of India
The market regulator, Securities and Exchange Board of India (SEBI), vide consultation paper dated 10.11.2022, proposed a mechanism to protect the concerns of public shareholders
