Discuss the challenges in exercising shareholder's rights under Organization for Economic Co-operation and Development (OECD) principles on Corporate Governance.

Principle III of the OECD Principles on Corporate Governance states that the corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights. The rights of shareholders have been well secured in the legislative framework. That is to say that the law is in place to secure the rights of the shareholders. All shareholders of the same class have the same rights. If that be so what is the challenge? The Challenges can be understood as below: Shareholders can be classified as dominant shareholders and minority shareholders. In general parlance dominant shareholders are those, who by virtue of their majority shareholding or their association with the company as its founders or for any other reason are able to exercise control in the management of the company. One of the basic challenges in exercising the shareholder rights stems from information asymmetry between the dominant shareholders and the minority shareholders. This could be attributed to lack of timely disclosure of accurate information on important matters which is crucial for the protection of shareholders' rights for two main reasons. First, shareholders need to have access to information about important matters to make decisions that are in their interests. Second, information disclosure is crucial in preventing managers and dominant shareholders from engaging in activities that are detrimental to minority shareholders. Another major challenge arises on account of lack of awareness amongst the small shareholders as their rights leading towards a passive approach to voting.