Minority shareholder

Minority shareholders are shareholders who have minority stakes in a company that is controlled by a majority shareholder.

The majority shareholder is most commonly the company's parent but may also be an individual or a group of connected shareholders. This is more common with smaller companies and in emerging markets.

The value of shares can be depressed by the existence of a majority shareholders (including a group of connected shareholders). Minority shareholders are often effectively deprived of any real say in the running of the company, and they may find that the company is run in a way which benefits the majority at their expense.

Although legal protections exist against the latter danger, they are not always effective. A majority shareholder cannot (at least in any country with an effective legal system) blatantly cheat the minority, but there are more subtle ways in which the majority can favour itself, for example, by preferring to deal with group companies (such as other subsidiaries of the parent).