Insights

A Comparative Analysis of the Rights of Shareholders in India and the United Kingdom

The rights of shareholders form the cornerstone of the corporate structure. Shareholders’ rights
refer to the legal entitlements of shareholders vis-à-vis companies in which they invest. These rights are, and always have been, primarily the result of private agreements that have been
subjected to various forms of explicit and implicit control. This legal framework provides major normative benefits by facilitating the creation of innovative and efficient corporate structures.

Shareholders are the risk capital providers; therefore, they must be able to protect their investment by confirming that the company is managed by a competent board of directors and that effective strategies for the company’s overall corporate performance and long-term sustainability are in place. Boards should serve the company’s shareholders equitably by respecting the rights of the investors. The Board should work towards ensuring that the shareholders are able to exercise their rights and those unnecessary barriers are not erected by which the exercise of ownership rights by the shareholders is impeded.

The rights of shareholders can therefore be understood better by way of a comparative analysis of the legislative provisions surrounding their rights in India and the United Kingdom. The laws of the United Kingdom heavily influence the company law in India, so several of the Indian laws owe their origin to British legislation. Both countries present striking resemblances with regard to the safeguards provided to secure the varied rights that are available to the shareholders. And yet we notice inherent differences in the articulation of these rights.

Therefore, it becomes crucial to understand the fundamentals of these rights in each of the two
nations.