Consequences of the abuse of minority veto rights in public limited companies

Abstract

This study analyzes the abuse of veto rights by minority shareholders in publicly traded companies and its negative impact on the overall functioning of companies and shareholder dynamics. It examines the financial and corporate repercussions of this phenomenon, assessing its influence on financial stability, operational efficiency, and investor confidence. The research identifies specific cases where the misuse of veto rights has generated internal conflicts, hindered key strategic decisions, and compromised corporate objectives. Furthermore, the study explores shareholder rights, underscoring the importance of balancing majority interests with the protection of minority rights. It highlights the urgent need to strengthen legislation to ensure that minority shareholders receive fair and equitable treatment, promoting transparency, accountability, and mutual trust among all investors and stakeholders. Using a comparative approach, the regulations and practices of publicly traded companies in Mexico, Colombia, Peru, and Uruguay are studied, analyzing how each country addresses the abuse of veto rights. This analysis identifies legislative similarities and differences and assesses best practices that could be adopted globally to mitigate corporate risks. The aim is to provide concrete solutions and recommendations that can inspire legal and regulatory reforms in other legal contexts. The study contributes to the debate on corporate governance, offering detailed analyses and practical solutions to improve resilience and fairness in publicly traded companies, promoting inclusive and sustainable economic development globally.