Corporate Mismanagement And Oppression

Financial Mismanagement

Financial mismanagement is a common type of corporate mismanagement, whereby board members or executives manipulate financial records to meet their objectives. This can lead to a loss of finances and a decline in the company's reputation. Ethical mismanagement is another type, whereby the organization fails to uphold ethical standards, such as discrimination, harassment, and abuse. The effects of this type of mismanagement are legal and reputational damage, high employee turnover, and low morale. Operational mismanagement involves mismanaging resources, which results in a decrease in productivity, customer dissatisfaction, and ultimately, negative effects on the company's profitability.

Corporate Oppression

Corporate oppression is a form of action or policy that adversely affects employees' well-being. It includes discrimination, harassment, and abuse, where employees may feel undervalued and marginalized, resulting in decreased productivity and increased employee turnover. Discrimination can be based on factors like age, race, gender, and sexual orientation. Harassment and abuse can take many forms, including physical abuse, bullying, and sexual harassment. These can lead to legal and reputational damage, as well as mental and physical health problems for employees.

The consequences of corporate mismanagement and oppression are far-reaching. Employees who experience discrimination, harassment, and abuse may develop mental and physical health issues, such as anxiety, depression, and stress-related illnesses. This can lead to decreased productivity, increased absenteeism, and ultimately, negative financial impacts on the company. Similarly, financial, ethical, and operational mismanagement can result in financial losses, low productivity, and negative effects on the company's reputation.

Several solutions can help prevent corporate mismanagement and oppression. One solution is to promote transparency and accountability within the organization by regularly reviewing financial data, upholding ethical standards, and providing a safe and supportive workplace. Employees can be provided with training and resources to prevent discrimination, harassment, and abuse. This can include regular training on diversity and inclusion, clear policies on appropriate workplace behaviour, and resources such as counselling services. Finally, companies can establish whistle-blower policies that allow employees to report any unethical or illegal behaviour without fear of retaliation.

Status Of Company Law In India

The Companies Act, 2013 has established specific provisions in sections 241-246 that address the issue of corporate mismanagement and oppression. The concept of corporate democracy is based on the principle of majority rule, which originated in the Foss v Harbottle case. This principle holds that individual shareholders have no legal recourse for any wrongdoing by the corporation, and any action taken in respect of such losses must be initiated by the corporation or through a derivative action.

However, the principle of majority rule can sometimes disregard the rights of minority shareholders. Therefore, it is crucial to maintain a balance between the interests of small or individual shareholders and the effective control of the company. To ensure this balance, the Indian company law of 2013 has established sections 241 to 246, which are designed to protect the rights of minority shareholders.

The Company Law 2013 does not provide a clear definition of the term "oppression." In the eyes of the court, oppression involves conduct that deviates from fair dealing standards and violates the conditions that require fairness, particularly concerning the shareholders' rights. Similarly, mismanagement is not explicitly defined in the Act, but it can be described as conducting company affairs dishonestly, ineptly, or prejudicially.

To address instances of oppression and mismanagement, Sections 241 to 246 of the Act provide remedies for affected members. A member of the company who believes that the company's affairs are being conducted in an oppressive manner or a material change has occurred that is not in the members' interest has the right to apply to the tribunal. The Central Government may also make such an application to the tribunal.

If the tribunal determines that the company's affairs are being conducted in a manner that is prejudicial to the interest of the members, public, or the company, it may issue orders that it deems appropriate. Such orders may include winding up the company.

Who Can File The Appeal

HEAD 1	HEAD 2
1) Members a) Company having share capital b) Company not having share capital	--Not less than 100 members OR not less than such percentage of the total number of its members as may be prescribed Whichever is less OR --Any member/members holding not less than such percentage of the issued share capital of the company prescribed Note: The applicant should have paid all the calls and other sums due on his/her shares Not less than 1/5th of the total number of its members
2) Depositors	--Not less than 100 depositors OR not less than such percentage of the total number of depositors as may be prescribed Whichever is less OR --Any depositor/depositors to whom the company owes such percentage of total deposits of the company as may be prescribed.

Requirements Of Filing

If any of the members, depositors, or classes of them believe that the company's management is acting in a way that is detrimental to the company's interests, an application must be submitted to the tribunal.

Requesting Directives From The Tribunal

• Prevent the business from committing an offence against the company's AOA or MOA

• breaking any rule set out in the company's AOA or MOA.
• acting in accordance with a resolution that was ruled invalid and which had the effect of changing the company's MOA or AOA by withholding information from the members or depositors. The directors are likewise subject to the constraint.
• doing any conduct that is against this Act or any other legislation that is currently in effect or for any false or misleading statements made by the firm or the director
• The examiner (including audit firm and the firm as well as all partners)
• Any specialist, adviser, or consultant to pursue any other remedy the Tribunal deems appropriate.

In conclusion, corporate mismanagement and oppression are significant challenges that companies and their employees face. Organizations must promote transparency, accountability, and a safe and supportive work environment to prevent these issues. With training and resources, clear policies, and whistle-blower policies, companies can help prevent these issues, improve productivity, and create a positive work environment for their employees.

The author is a student at Amity University Lucknow Campus .Views are personal.