Protection at Common Law :

It is a well-known principle, enunciated in Foss vs. Harbottle that the rule of majority shall prevail. But there are certain exceptions to this rule where the majority rule does not prevail. These are as under:

(a) Where the act complained of is illegal or ultra vires the company;

(b) Where the act done by the majority constitutes fraud on the minority;

(c) Where a resolution is passed by a simple majority for any act, which requires special resolution for it to be effective;

(d) Where the act infringes the personal rights of an individual member;

(e) Where any act amounts to oppression of minority or mismanagement of the affairs of the company.

In all these cases a minority shareholder is entitled to bring an action for a declaration that the resolution complained of is void, or for an injunction to restrain the company from passing it. All these principles have been followed in a few leading cases in India as well.