The principle of majority rule is a staple of democratic
theory. Typically the victor of a close election is quick to proclaim that “the
people” have spoken. That “the people” corresponds to 51% of those who voted is
beside the point. What about the 49% who voted against the victor? What about
the minority’s rights? In the U.S. Senate, the fact that it takes 60 out of 100
votes to end a filibuster means that a large minority can halt a majority’s
bill. In the European Council, the qualified majority rule means that for a
bill to pass, the states in the majority must be at least 55% of the total
number of states and must have at least 55% of the E.U.’s population between
them. A large minority can therefore
stop a small majority. In both of these “intergovernmental” bodies, the
implication is that 51% of a vote is not as significant as the principle of
majority rule suggests. What about the rights of a minority of shares of stock
in corporate governance? When a majority stockholder has control of management,
the interests of the minority stockholders can be shirked. This is particularly
true when a majority stockholder proposes a going-private transaction with the
aid of management.
The full essay is at "Protecting Minority Stockholders."
The full essay is at "Protecting Minority Stockholders."
1. Peter Lattman, “To Perelman’s Failed Revlon Deal, Add Rebuke From S.E.C.,” The New York Times, June 14, 2013.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.