Listed vs private company reality
Listed companies are well regulated. Shareholders may not read every document but system works. Private companies act like proprietorships. Expansion brings new investors and agreements. Human greed leads to breach of trust. Then one group uses business secrets to allege oppression. Section 397/398 was meant as preventive measure. But it has become tool for pressure. CLB has powers to "put an end to matters complained of" but with express limits. This creates confusion and delay.
Majority feels defenseless
Majority lists 9 concerns. Core feeling is defenselessness. They cannot buy minority easily. They cannot ignore petition because it affects bank, contracts and reputation. They cannot approach CLB easily if minority is already there. Deadlock conclusion follows. Fictitious ROC forms are weapon now. No quick way to delete them. Pendency of 397/398 petition freezes decisions. Majority asks: where is our remedy under Act? Majority rule in AGM seems meaningless.
Minority feels unprotected
Minority lists 7 concerns. Delay is killer. Orders are not implemented. Limited powers of CLB force them to file civil suits too. Civil court is slow. Exit at fair value is not available. So they stay and fight. They feel Act promises protection but delivers procedure. This is why many do not approach at all despite oppression.
Urgent reforms for 2010
Two things need immediate fix. One, mechanism to remove fictitious forms from ROC without full 397/398 trial. Two, effective NCLT with independent members, contempt power and benches across India. Bar on civil courts alone will not help. Culture must change. CLB proceedings should not be shouting matches. NCLT must be like court, not like tribunal in name only. SC directives on NCLT constitution must be implemented with quality.
Conclusion
Clb nclt 397 398 delays fictitious forms reform are interlinked. Both majority and minority lose faith. Companies Act is fine, but dispute resolution is broken. In 2010, as we move to NCLT, we must address these shareholder concerns. Else new tribunal will repeat old story.
