Fraud on the Minority Law and Legal Definition

Fraud on the minority refers to an improper exercise of voting power by the majority of members of a company. It is the evidence of failure to cast votes for the benefit of the company as a whole. A majority in control of a company perpetrates a fraud on the minority. A resolution passed upon such voting is voidable. For example, a resolution for alteration of the articles of association to allow the compulsory purchase of members' shares.

Fraud on the minority' means there has been some element of misappropriation of company property. [In re Tyco Int'l, Ltd., 2004 DNH 155 (D.N.H. 2004)]

Fraud on the minority permits a derivative suit when the plaintiff sufficiently pleads that a majority who are in control of a company perpetrated a fraud on the minority of the company. [Tomran, Inc. v. Passano, 159 Md. App. 706, 714 (Md. Ct. Spec. App. 2004)]