ABSTRACT
Minority shareholder protection is vital to corporate governance. In the words of La Porta et al, ‘corporate governance is, to a large extent, a set of mechanisms through which outside investors protect themselves against expropriation by the insiders’.1 The reform process in respect of the law on minority protection has attended to two key perspectives, the ‘law matters’ perspective and contractarianism. The first position posits the notion that minority shareholding will only be attractive and thus encourage the wide share dispersal which characterises Anglo-American corporations if there are sufficient legal protections for shareholders without a majority holding. The second perspective asserts that unfettered minority rights are not economically efficient as ultimately the costs to the business from a minority action are costs that are borne by shareholders with the largest stake in the business. This position advocates strong controls over minority rights. The law matters thesis and contractarianism will be briefly examined in the first part of this chapter in so far as they relate to minority shareholder protection. The chapter will then examine the law on minority protection as it has developed, the aims and ideological influences of the reform process in respect of minority protection and its legislative expression in the 2006 Act.
