Corporate Governance and Vulnerability of Minority Shareholders: An Analytical Study

Abstract

This study reviews the corporate governance in Pakistan with more focus on the issues of minority shareholders. Due to various flaws including weak regulatory framework, dominancy of the majority shareholder and inadequate enforcement mechanism minority shareholder feel themselves unsecure with regard to their investment. To run the affairs of corporate sector a system of rules, practices and processes is called as corporate governance. A framework balancing the interests of the company’s stake holders and helping to build trust in the business environment is established under the corporate governance. Enhancing the trust of investors, accountability, fairness and transparency in the affairs should be essence of the corporate governance. Doctrinal methodology has been applied in this research paper which was sufficient and satisfying to reach a conclusion. In this regard relevant laws, regulations and judicial decision were analyzed and in pursuance of this gaps and inconsistencies have been identified. It appeared that there are various flaws in the corporate governance in Pakistan consequently increasing dominancy of the majority shareholders and reducing the trust of minority shareholders. There is immediate need that Government should pay attention to this and take appropriate measure. In view of the discussion and result for the development of corporate governance and economic growth certain recommendations based on a set of reforms has been suggested.