Note on Oppression and Mismanagement

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OPPRESSION AND MISMANAGEMENT UNDER THE COMPANIES ACT, 2013

1. Section 241

Any member of a company who complains that the affairs of the company are conducted in a manner –

– Prejudicial to Public Interest; or

– Prejudicial or oppressive to any members; or

– Prejudicial to the Interest of the Company; or

– Any material changes against the Interest of the creditors or any shareholders or

– Any change likely to affect the affairs of the company;

Then the member can file an application before the Tribunal (NCLT).

2.  Section 244

A company having share capital can file application with the Tribunal. Application can be filed by:-

-Not less than 100 members or 1/10th of total members, whichever is less; or

-Any member/members holding not less than 1/10th of issued capital subject to no dues in respect of those share held.

Purpose of application

• Restrain the company from committing act ultra vires to MOA/ AOA of the company
• Breach of any provisions of MOA/AOA
• Restrain from an act contrary to the provisions of the act or any other law for the time being in force.
• To claim damages /compensation/demand/suitable action from or against
• Company/Directors for any fraudulent, unlawful or wrongful or omission or conduct or its or their part
• The auditor including audit firm of the company for any improper misleading statement of particulars made in his audit report
• Any expert or advisor or consultant or any other person for any incorrect or misleading statement made to the company or for any fraudulent unlawful or wrongful act or conduct or any likely act or conduct or his part
• To seek any other remedy as the tribunal may deem fit