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MEANING OF OPPRESSION AND MISMANAGEMENT

The word 'Oppression' is not defined under the Companies Act, 2013. Oppression is the movement made by the authority in unjust manner against the party who gave his consent. As per the Dictionary of Black Law, the term 'Oppression' means 'the act or an instance of unjustly exercising power.' Oppression can also be defined as it is an act which involves a violation or contravention of fair condition especially which is regarding the right of shareholders.

The word 'Mismanagement' is also not defined under the Companies Act, 2013. It can be described as a control the affairs of the company in unjust, dishonest manner.

Oppression And Mismanagement Under Companies Act

SECTION 244

Section 244 of the Companies Act, 2013 deals with who can file an application against oppression and mismanagement. It specifies the right of a person that can file against the oppression and mismanagement. The right is only given to the company and only to one member who will file an application on behalf of the other member. For the company, the right is furthermore divided and depending upon the companies which has share capital and which doesn't have share capital. If the company is having share capital then, it will be calculated as per the number of the share capital held by the member.

So, the number of share capital means it shall be 100 or 1/10 of the total member and when the calculation is as per the value of the share capital then, the value shall be 1/10th of the share capital. In case the company is not having share capital then, 1/5th of the member can apply for an application against oppression and mismanagement. In case of one person has a right to file an application, the person shall have the consent of all the other members in written form.

 

SECTION 241

Section 241 of the Companies Act, 2013 deals with the application against oppression and mismanagement and specify the provision for an application. Before the Companies Act, 2013 there was Companies Act, 1956 in which Section 397 was dealing with the provision of application against oppression and mismanagement. There is Chapter XVI of the Companies Act, 2013 which deals with the application against oppression and mismanagement and also states that who can file an application against oppression and mismanagement.

 

The member of the company can make an application against the affairs of the company, when the member feels there is something shady in the affairs of the company. That action can affect the interest of the members and also the public at a large. The affairs of the company may be oppressive to the individual member or to all the members of the company. The member who is making an application can also make an application when as of his opinion there is some material change in the affairs of the company which is prejudicial to the company. Even the Government can also file an application to the tribunal if they think it may deem fit, that there is something shady in the management of the company.

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Category Corporate Law, Other Articles by - Shivam from Taxblock 



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