• 1. Minority Shareholders (Less than 10%):

  If you own less than 10% of the company's shares, you're considered a minority shareholder. While you might not have much say in big decisions, you still have important rights:
  • Attend and Vote at Meetings:You can attend company meetings and vote on various issues.
  • Receive Dividends: You're entitled to a share of the company's profits.
  • Inspect Company Records: You can look at the company's important documents.
  • Protection Against Mismanagement: If you believe the company is being run unfairly, you can raise your concerns with the authorities (NCLT)

• 2. Significant Influence (10% or More):

  Owning 10% or more gives you more power. Shareholders holding 10% or more of the shares have significant influence, they can: -
  • Call for General Meeting: You can request an Extraordinary General Meeting (EGM) to discuss urgent matters.
  • Stop Voluntary Liquidation: If 10% or more shareholders object, the company cannot proceed with voluntary liquidation.
  • Impact on Listed Companies: For companies listed on the stock exchange, SEBI rules say your influence must be reported, and you can impact important disclosures and decisions.

• 3. Blocking Power (25% or More):

  With 25% or more shares, you can block special resolutions. Special resolutions require at least 75% of votes in favor to pass, so holding 25% can effectively prevent these resolutions from being approved. Special resolutions include changes to the Memorandum of Association (MoA), Articles of Association (AoA), and other significant decisions.

• 4. Control (50% or More):

  When you own more than 50% of the shares in a company, you achieve majority control. Here’s what it means:
  

  i.Majority Control:

  Owning more than 50% of the shares means you have the majority vote in the company. This gives you the power to make key decisions without needing approval from other shareholders. For example:

  • Appointing Directors: You can choose who sits on the board of directors, the group of people responsible for overseeing the company.
  • Approving Financial Statements: You can approve the company’s financial statements, which are the formal records of the company’s financial activities and position.
  • Ordinary Decisions: Any other day-to-day decisions that require a vote can be decided by you.

  ii.Enhanced Control:

  If you own more than two-thirds (66.67%) of the shares, you can make even more significant decisions with ease by passing special resolution.

• 5. Absolute Control (75% or More):

  If you hold 75% or more of the shares, you have full control over the company. You can pass special resolutions easily. Special resolutions, which require at least 75% of votes to pass, can be approved solely by you. This gives you the power to make significant decisions without needing support from other shareholders. These decisions include:
  • Attend and Vote at Meetings:You can attend company meetings and vote on various issues.
  • Receive Dividends: You're entitled to a share of the company's profits.
  • Inspect Company Records: You can look at the company's important documents.
  • Protection Against Mismanagement: If you believe the company is being run unfairly, you can raise your concerns with the authorities (NCLT)

• 6. Supermajority Approval (95%):

  To call a general meeting on short notice, 95% of shareholders must agree. Usually, calling a general meeting requires a notice period (21 days). However, if 95% of the shareholders agree, you can call a meeting on shorter notice. This can be useful for urgent matters that need quick resolution

Why This Matters for Startup Founders