Transfer of Shares without Providing Pre-Emptive Right to Existing Shareholders Amounts To Oppression and Mismanagement
MEANING OF OPPRESSION:
In the Black Law Dictionary, the term ‘persecution’ is characterized as ‘the demonstration or a case of unjustly exercising power.’ It can also be described as the action of authority which is done in an unjust manner against the consent of other party. There is no clear definition of oppression and mismanagement in companies Act, but it has been defined as conduct that involves a visible departure of fair standard of dealing and violations of conditions in regards to rights of minority shareholders
APPLICATION IN CASES OF OPPRESSION:
The shareholder who is aggrieved under section 241 to 246 of the act can approach National Company Law Tribunal for seeking interim measures under the act.
APPLICATION AGAINST OPPRESSION AND MISMANAGEMENT:
Section 241 of the Companies Act, 2013 deals with the application against oppression and mismanagement and Chapter XVI of the act talks about the person who can file an application against oppression and mismanagement.
WHO CAN RECORD AN APPLICATION AGAINST MISTREATMENT AND MISMANAGEMENT?
Section 244 of Companies Act, 2013 deals with the person who can apply against oppression and mismanagement, so it says that the company and members can apply against oppression and mismanagement. In case of company it further talks about company having share capital and company not having share capital. In case where a member who is filing an application is from company having share capital then the calculation shall be based upon the number of capital held, if we talk in numbers then it should be 100 or 1/10 th of the share capital value, and in case of company not having any share capital then 1/5 th of the total members can file an application against oppression and mismanagement.
APPEALS AGAINST THE ORDERS OF THE TRIBUNAL AND VARIATION OF THE ORDER OF THE TRIBUNAL:
If any person wants to file an appeal against the NCLT (National Company Law Tribunal), then he can file to National Company Law Appellant Tribunal (NCLAT). The procedure of filing an appeal to NCLAT is explained below:
1. The appeal can be filed any person who is aggrieved by the decision of NCLT.
2. If the decision is based with the consent of both the parties then, the appeal cannot be filed to NCLAT.
3. The appeal which is to be filed shall be filed within a period of forty-five days from the decision made by the tribunal. If anyone wants an extension then there he should give a show cause notice of why an extension shall be granted. If the tribunal is satisfied then they can grant an extension for another forty-five days.
4. On receiving the appeal, the tribunal will give an opportunity of being heard to both the parties and then pass an order which is appropriate.
Author-CA.Madhuri Marne
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