The Cumulative Voting System and Minority Shareholders’ Protections in Corporate Governance in Pakistan

Abstract

The objective of this paper is to discuss the minority shareholders’ protection mechanism in the view of the cumulative voting system in corporate governance in Pakistan. The voting rights attached with shares provide a mechanism by which the shareholders can participate in the management and can also discipline the management if they are not performing.The cumulative voting system provided in the company law of Pakistan is one of the mechanisms which provide protection to minority shareholders.This mechanism provides minority shareholders an opportunity to elect their representative in the board of directors. However, this mechanism is failed to provide protection to minority shareholders as it is not implemented in its true spirit or being frustrated through different techniques in Pakistan. Therefore, there is a need to revamp the remedy in order to provide better protection to shareholders in general and minority shareholders in particular in the context of global trend keeping in view the nature of corporate structure in Pakistan.