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Sikander Ahmed Shah


Mergers are not only becoming prevalent in the contemporary, but are also considered a phenomenon of the gravest concern both from a legal as well as from a business perspective. In fact the law seems to be suspicious when mergers involve controlling shareholders having vested interests making such consolidation decisions. The interest and betterment of the minority shareholders is considered to be a prime concern both from a societal as well as from an economic standpoint. It is for this reason that mergers are heavily regulated and monitored by both the Courts as well as administrative/regulatory agencies such as the SECP in Pakistan. This paper first lays out the procedural workings of a merger in Pakistan and then analyzes the legal provisions to determine the adequacy of such laws in providing requisite protection to minorities in mergers. An elaborate discussion of the relevant landmark cases follows. Judicial interpretation of statutes, judge made law, rules and policy considerations are also discussed. A pragmatic determination of the level of protection actually awarded to minority shareholder in mergers is also elaborated upon. At this juncture, the shortcomings in the relevant Pakistani legal infrastructure such as corruption, nepotism and ineptness are also highlighted.

Keywords: Minority Shareholder Protection, Corporate Governance, SECP, Swap Ratio Valuation, Merger

How to cite this paper: Shah, S. A. (2008). Mergers and the rights of minority shareholders in Pakistan. Corporate Ownership & Control, 5(2-1), 192-206.