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The risks of having minority controlling shareholders in firms

Such stakeholders can exploit their control at the expense of the company and other minority shareholders without being caught by interested person transaction and other rules.

It is important to have independent directors who are independent from management and controlling shareholders, and who cannot be appointed or removed just by controlling shareholders. Companies with minority controlling shareholders warrant closer attention.

IN conversations on corporate governance with practitioners here, some still hold the view that independent directors need only to be independent from management (sometimes referred to as independent from management and business relationships) but need not be independent from significant...

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