An Analysis of Legal Fairness in the Protection of Dividend Rights for Minority Shareholders in Limited Liability Companies
DOI:
https://doi.org/10.5281/zenodo.21736894Keywords:
Legal fairness, Dividend rights, Minority shareholders, Limited liability company, Corporate governanceAbstract
This article analyzes legal fairness in the protection of dividend rights for minority shareholders in limited liability companies. The issue is significant because dividend distribution represents a fundamental economic right of shareholders, yet minority shareholders often occupy a vulnerable position when corporate decisions are dominated by majority shareholders through the General Meeting of Shareholders. This study aims to examine whether existing legal norms and corporate governance principles provide fair and proportional protection for minority shareholders in dividend-related decisions. The research applies a normative juridical method with statutory and conceptual approaches. Data were collected through literature study and analysis of relevant laws, regulations, legal doctrines, and corporate governance principles; therefore, this study does not involve respondents or informants. The data were analyzed qualitatively through legal interpretation, conceptual analysis, and systematic reasoning. The findings indicate that legal protection for minority shareholders’ dividend rights remains largely formal and depends heavily on transparency, accountability, and good faith in corporate decision-making. Majority control may create potential unfairness when dividend policies are determined without sufficient consideration of minority shareholders’ legitimate economic interests. This study concludes that stronger substantive legal protection and fairer governance mechanisms are necessary to promote equitable dividend distribution and enhance corporate accountability.
Downloads
References
Abdeljawad, I., Rabaia, D. J., Abdelhaq, R., & Salem, A. (2026). The association between corporate social responsibility disclosure and dividend policy: Insights from an emerging economy. International Journal of Disclosure and Governance, 23(2), 458–476.
ADUMA, O. C. (2024). The Balancing of Interests between Minority and Majority Shareholders in Corporate Law: A Comparative Analysis. Journal of Refugee Law and International Criminal Justice, 2(1).
Akhtar, T. (2026). The role of FinTech on the relationship between ownership structure and dividend payments. International Journal of Finance & Economics, 31(1), 99–128.
Alfordy, F. D., & Othman, R. (2022). Legal challenges towards achieving corporate governance transformations in emerging economies—Minority shareholders’ rights protection: The case of Saudi Arabia. European Business Organization Law Review, 23(4), 997–1023.
Arhinful, R., & Mensah, L. (2026). Exploring Dividend Policy Effects on Corporate Reputation and Product Responsibility in the German Market. Business Strategy & Development, 9(2), e70325.
Atallah, A. (2024). The corporate governance role in protecting minority shareholders rights in public joint-stock companies (Comparative Study).
Ben Salah, O., & Jarboui, A. (2022). Dividend policy, earnings management and the moderating effect of corporate governance in the French context. Journal of Financial Economic Policy, 14(3), 356–380.
Bunyaminu, A., Yakubu, I. N., & Oumarou, S. (2025). The impact of board attributes and ownership concentration on firm market value: empirical evidence from an emerging market. Cogent Business & Management, 12(1), 2437147.
Chandra, S., & Ruslim, H. (2026). The Effect of Dividend Policy and Corporate Governance on Company Value: The Role of Tax Avoidance Moderation in Manufacturing Companies. Inkubis: Jurnal Ekonomi Dan Bisnis, 8(2), 703–723.
Dandara, L., & Revenco, V. (2024). Shareholders’ rights in joint-stock companies: legal regulations and opportunities for effective corporate governance. Journal of Research on Trade, Management and Economic Development, 22(2), 60–80.
Das Mohapatra, D., & Panda, P. (2022). Impact of corporate governance on dividend policy: A systematic literature review of last two decades. Cogent Business & Management, 9(1), 2114308.
Ellili, N. O. D. (2022). Impact of environmental, social and governance disclosure on dividend policy: What is the role of corporate governance? Evidence from an emerging market. Corporate Social Responsibility and Environmental Management, 29(5), 1396–1413.
Emil, F. (2024). Analisis Kinerja Succes Rate Indikator Teknikal Menggunakan Relative Strength Index dan Moving Average Convergence Divergence pada Saham Sektor Energi yang Terdaftar di Bursa Efek Indonesia Periode 2022-2023. Universitas Mohammad Husni Thamrin.
Farooq, M., Al-Jabri, Q., Khan, M. T., Ali Ansari, M. A., & Tariq, R. Bin. (2024). The impact of corporate governance and firm-specific characteristics on dividend policy: an emerging market case. Asia-Pacific Journal of Business Administration, 16(3), 504–529.
General, D. (2026). AN ANALYSIS OF CORPORATE GOVERNANCE EFFICACY IN INDIAN BUSINESS GROUPS TO PROTECT MINORITY SHAREHOLDERS. IJRDO-Journal of Business Management, 12(1), 56–62.
Handayani, T., Widianti, H., Sulistyawati, D. R., & Andini, R. (2022). Literature Review: Dividend Policy, Agency Theory and Corporate Governance. Tegal International Conference on Applied Social Science & Humanities (TICASSH 2022), 117–123.
He, H., Chen, J., & Fang, J. (2025). How to empower minority shareholders: Chinese practice and literature review. Research Handbook on Corporate Governance in China, 338–358.
Huang, F., Ge, L., & Wu, S. (2023). Minority shareholder protection, corporate governance, and investment efficiency. Finance Research Letters, 58, 104506.
Jia, Y., Chen, S., Yang, H., & Zhang, Y. (2025). Minority Shareholders’ Dissent and Cost of Debt Financing: Evidence from Voting on Guarantee Proposals of Listed Companies in China. Emerging Markets Finance and Trade, 61(8), 2427–2459.
Jiang, L., Wei, S., & Zhen, J. (2025). Can Minority Shareholder Litigation Restrain Earnings Management? A Perspective on Judicial Empowerment and Shareholder Activism. Emerging Markets Finance and Trade, 1–30.
Karjoko, L., Jaelani, A. K., & Danendra, R. (2025). Legal Inconsistency on the Right to Build: Investment, Agrarian Rights, and Constitution. Journal of Sustainable Development and Regulatory Issues (JSDERI), 3(2), 324–346.
Nzekwe, J. C. (2026). From Stewardship to Sacrament: A Search for Theological Foundation for Ecological Responsibility in Catholic Healthcare Institutions. Journal of Pastoral and Practical Theology (JPPT), 5(1), 73–84.
Okolocha, U. E., & Ogbu, F. C. (2026). Constitutional Protection of Shareholders and Minority Interests under Nigerian Company Law. 2026) 3 (2) Nnamdi Azikiwe University Journal of Private and Property Law Https://Journals. Unizik. Edu. Ng/Naujppl/Article/View/8051 Accessed 25th May 2026.
Pargendler, M. (2023). Corporate Law in the Global South: Heterodox Stakeholderism. European Corporate Governance Institute-Law Working Paper, 718.
Pinto, G., & Rastogi, S. (2022). Corporate governance impact on dividend policy of NIFTY-500 indexed Indian pharmaceutical companies (2014–2019). Corporate Governance: The International Journal of Business in Society, 22(7), 1547–1566.
Puspita, L., & Gunadi, A. (2025). LEGAL PROTECTION OF MINORITY SHAREHOLDERS INTERESTS IN MERGER ACTIONS. Awang Long Law Review, 7(2), 418–426.
Putri, R. J. (2023). The effect of dividend policy and profitability on firm value:(case study of manufacturing companies in the consumer goods sector listed on the indonesia stock exchange in 2017-2021). Accounting and Finance Studies, 3(2), 142–156.
Raof, N. A., Aziz, N. A., Omar, N., Othman, R., & Salleh, H. M. (2025). Exploring the depths: A comparative analysis of doctrinal and non-doctrinal legal research. International Journal of Research in Social Science and Humanities (IJRSS) ISSN: 2582-6220, DOI: 10.47505/IJRSS, 6(5), 122–129.
Sabri, H. A., Salih, B. M., & Omar, H. M. (2024). Analyzing the influence of dividends on share prices in the Iraqi stock market from (2010-2020). Ascarya: Journal of Islamic Science, Culture, and Social Studies, 4(1), 43–54.
Sáez Lacave, M. I., & Gutiérrez Urtiaga, M. (2014). Dividend policy with controlling shareholders. European Corporate Governance Institute (ECGI)-Law Working Paper, 250.
Tayachi, T., Hunjra, A. I., Jones, K., Mehmood, R., & Al-Faryan, M. A. S. (2023). How does ownership structure affect the financing and dividend decisions of firm? Journal of Financial Reporting and Accounting, 21(3), 729–746.
Tioluwani, R. (2022). CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS: A LEGAL PERSPECTIVE ON MINORITY PROTECTION.
Yilmaz, M. K., Aksoy, M., & Khan, A. (2024). Moderating role of corporate governance and ownership structure on the relationship of corporate sustainability performance and dividend policy. Journal of Sustainable Finance & Investment, 14(4), 988–1017.
Zhao, Y. (2024). Research on the Protection of the Rights and Interests of Small and Medium-Sized Shareholders under the Dual Shareholding Structure [J]. Journal of Economics and Law, 1(2), 96–98.
