Case breakdown: Movie Bazaar:
In this particular scene Saif Ali Khan seems to have ownership over 19% of shares that still does not give him the right to control the company. Although the cunning strategy that he plays with another shareholder, it is possible but he gaining the control of the company does not seem possible.
What is Majority Shareholding?
Majority shareholding means any person or company holding 50% of the voting shares of the company.
Someone who has majority shareholding is either the founder or descendant of the owner in the business. A majority shareholder would have more power than all the shareholders’ combined. In India, shareholders’ have a say in the appointment and reappointment of board of directors.
If a company has 10,000 shares and if one owes 5001 shares, has approximately 50.1% (5001/10,000), that is the controlling interest would be any person who owns 50% of all shares plus one share.
When a majority shareholder himself is not a director and he nominates someone, it is obvious that the majority shareholder must have prior information to take informed decision to advise his/her nominee director to take the right call. This point was held in the Ratan Tata case involving Cyrus Mistry.
Warren Buffet, one of the richest person of the world owns only 32.4% of Berkshire Hathway’s (Market cap: $456.4 billion) common stock which implies he isn’t the majority shareholder.
Written by: Ms. Gitika Chandra