Suppose in a listed company, the promoter owns more than 51% of shares. In that case, what prevents the promoter from exerting his own free will, like appointing his own family/friends in important positions and siphoning off profits in the name of taking salaries and commissions.

Even the collective votes of minority shareholders will not matter as the promoter owns more than 51% and his vote will ultimately overrule.

  • 1
    Which legal jurisdiction are you asking about?
    – AakashM
    Dec 10, 2021 at 12:31
  • 1
    Please add the country tag...
    – Aastik
    Dec 10, 2021 at 15:08
  • I am from India, so an Indian context would be nice. But the question is more in general, so if you are from another country can you please share some examples about what are the applicable laws there under such circumstances.
    – abhi nikks
    Dec 18, 2021 at 18:10
  • 3
  • What is the meaning of "promoter" in this context? Does it refer to a specific meaning of "promoter" that appears in the company laws of India? Are all major shareholders and all members of the board of directors considered "promoters"?
    – Flux
    Jan 10, 2022 at 1:20

1 Answer 1


"What prevents abuse by majority shareholders?"

Most jurisdictions have laws that attempt to protect the rights of minority shareholders. The basic principle would be that the majority shareholders cannot intentionally reduce value of the company / reduce value attributable to minority shareholders.

Whether those laws are sufficiently comprehensive, or enforced, or effective, would probably be a few phd-theses-worth of material to discuss. In particular, the country you're in will affect the applicable laws and their outcomes.

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