Chapter 241 to 246 have the provisions of Oppression and Mismanagement. Below is a quick description of each part. Oppression, in its most basic sense, refers to the use of authority or power in an unfair or harsh manner. Mismanagement, on the other hand, refers to managing affairs in a biased, dishonest, or ineffective manner. The member of the firm may submit an application to the Tribunal for "Oppression" and "Mismanagement" in any of the following situations:
A major change is made that is not in the interest of the member, or the company's affairs are being managed or handled in an oppressive way.
Major Power of the Tribunal
According to Chapter 242 of the Company Act, the Arbitration Tribunal has certain authority to consider applications from members alleging "oppression" & "mismanagement." Therefore, the Tribunal has the authority to issue the directive as it sees appropriate if it believes that the company's operations are being managed in a way that is harmful to the interests of the members, the general public, or the firm.
There are some important points which are included in issued order. Let’s go through one by one to understand more about the power to the tribunal.
Control over how a company's affairs are to be conducted.
Sale of a member's stake or shares by another participant. However, if the corporation decides to buy the shares, the share capital should be reduced as a result.
Limits on the allocation and transfer of corporate shares.
A specific agreement between the firm and the CEO or another director may be canceled, set aside, or modified.
Any movement, transportation, implementation, making a payment, or other act involving the asset that occurred either to or against the firm during the three-month period prior to the commencement of the request would be deemed waived.
Withdrawal of the chief operating officer, director, or another board member from their positions and the process for reappointment.
The managing director, manager, or director's ill-gotten riches must be recovered, and how.
According to the chapter 244, there should be present minimum required members to file an application to the tribunal. The requirement is having around 100 members of the company if that particular company has a share capital. If a company doesn’t have a share capital then there should be 1/5th of total members of the company.
Points to remember-
The Tribunal has the authority to waive all or any of the aforementioned conditions for the required minimum number of members in order to submit a request to the Tribunal.
After receiving the other members' written approval, one or more members may submit an application on their own or on their group's behalf.
Conclusion
It should be noted that the Central Government also has the option of filing an application with the Tribunal if it believes that the Company is conducting its activities in a proper way that is sufficient to the welfare. There are some conditions which should be followed in the process of your application to the tribunal. So, it is very important to have knowledge about the order and required members before digging into the procedure. If you need any kind of help or support regarding oppression and mismanagement, we would be happy to help you.
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