Significance of Oppression and Mismanagement
There is no particular definition of the terms oppression and mismanagement; nevertheless, the Companies Act, 2013 mentions that “oppression” will be constituted when the conduct of the company is against public interest and when the imposition of innovative and risky objects that are being countered by the other group of shareholders, exercise of an unwarranted burden on any particular member, and the company’s acts are against the company’s best interests as well as against the provisions of the law, or in the interests of the creditors consisting of the company’s shareholders or debenture holders has happened within the management of the company, irrespective of whether by a modification in the manager or Board of Directors or if it does not have any share capital, within this membership or in any other way, and that because of such modification, the company’s affairs are likely going to be conducted in a way harmful to the interests of its members.
Right to apply under Section 241 of the Oppression and Mismanagement Companies Act 2013
Section 244 of this Act is concerned with who will be able to file an application against mismanagement and oppression. It specifies an individual’s right that will be able to file against mismanagement and oppression. As stated by the Bar Association India, this right will be provided only to the company and one particular member who will be filing an application for other members. This right will be furthermore divided for the company and depending on the companies having share capital and which do not have any share capital. In case the company does have a share capital, it has to be calculated according to the share capital number held by the member.
Oppression and Mismanagement Companies Act 2013
Therefore, the share capital number implies that it is going to be 1/10 or 100 of the total number and the value is going to be 1/10th of the share capital when the calculation will be according to the share capital’s value. In case the company does not have a share capital, 1/5th of the members can make an application against mismanagement and oppression. If one individual has the right of filing an application, he will be having the consent of every other member in written form.
SECTION 241
Section 241 of this Act is concerned with the application against mismanagement and oppression and specifies the provision of an application. There had been Companies Act, 1956 before the 2013 Companies Act where Section 397 was concerned with the provision of applications against mismanagement and oppression. This happens to be Chapter XVI of the Act dealing with the application against mismanagement and oppression and also mentions who will be able to file an application against mismanagement and oppression.
The company’s member can make an application against the company’s affairs when he feels that something is shady in the company’s affairs. This particular action might impact the members’ interest as well as that of the public. The company’s affairs might be oppressive to all the members or a particular member of the company. It is also possible for the member making an application to make an application when there is any material change in the company’s affairs that is harmful to the company.