Dilating the Scope of Oppression and Mismanagment under the Companies Act, 2013: A Measure to Fortify Corporate Governance

Abstract

Corporate governance is essential for ensuring the stability of all stakeholders in a corporation. One key aspect of this is the remedies against oppression and mismanagement, which are designed to protect the interests of shareholders. However, in today’s fast-changing business environment, corporations are expected to play a multidimensional role, and the interests of other stakeholders such as creditors, employees, board of directors, and society at large cannot be ignored. The current legislative approach in India, which focuses solely on protecting the interests of shareholders, falls short in addressing the concerns of these other stakeholders. Additionally, the integration of Environmental, Social and Governance (“ESG”) considerations in corporate governance is increasingly being recognized as crucial for long-term sustainability and value creation for all stakeholders. This paper takes a critical stand against the restrictive approach of the legislature in India by confining the ambit of remedies against oppression and mismanagement to protect the interests of only shareholders. The paper argues that by stretching the provisions of these remedies and incorporating ESG considerations, the Indian model of corporate governance can be made more robust and inclusive, and better aligned with global ESG standards and larger stakeholder perspective. The authors delve into the provisions on the subject and the issues embattling the Indian model of corporate governance as it still relies on the conventional shareholder model. As mitigating solutions, the authors propose certain policy changes in the extant system, to make the Indian model of corporate governance more robust and ironclad to protect the interest of every stakeholder involved.