General Principles For Protecting The Minority Shareholders Of A Public Company According To The Legislation Of Russia And The UK

In modern corporate law, there is much concern around the issue of protecting public company minority shareholders against infringements of their rights and legitimate interests. Minority shareholders seem to be an easy target for majority shareholders who concentrate large stake and, in fact, rule the company in their personal interests. However, minority shareholders are vested with various legal instruments against any violation of their rights or the risk of such violation to minimize or eliminate adverse consequences or the damage caused. At the local level public companies address this issue likewise. To maintain the trust of both existing and potential investors public companies adopt unified principles of corporate governance recommended by OECD, supporting the idea of protecting the rights of minority shareholders. This study includes a comparative analysis of the approaches existing in Russia and the UK to the protection of minority shareholders’ rights in the public company. The UK has richer history of corporate relations' evolution and developed its unique approach to the issue of protecting the rights of minority shareholders. Unlike Russian law, where minority shareholders are provided with the same protection tools as the rest of the shareholders regardless of the amount of stake they own, the UK law provides for both general and special (e.g. “unfair prejudice” claim) tools for the minority shareholders. The analysis of the UK case law based on the principle of justice is also crucial to assessing the existing in the UK approach to protecting the rights of minority shareholders. The issue of protecting the rights of minority shareholders is given consideration in the doctrine. However, published sources do not mention the importance of good corporate governance in protecting the rights of the public company minority shareholders. Moreover, existing studies are mainly focused on the civil-law aspects of protecting the rights of minority shareholders without consideration of the role of the financial market regulator in this issue. For instance, Bank of Russia, by adopting various instructions, conducting inspections in public companies under the complaints of the minority shareholders and imposing sanctions aimed at eliminating violations found – obviously plays a significant role in protecting the rights of minority shareholders. Similarly, in the UK there is a system of bodies that regulate different spheres of financial market and protect the interests of minority shareholders in cases of violation of their rights.