INTRODUCTION
Before I start to write this paper, I want to ask one question. Can an individual shareholder complaint before a court, if some wrong has been done to the company? When this question is raised we have to know that the courts are mostly reluctant to interfere in the internal matters of the company. “It is not business of the court to manage the affairs of the company. That is for the shareholders and the directors” . From this statement we can understand that the control and power of a company is vested in the shareholders. Normally things are dealt by vote. So the majority shareholders have the majority voting powers which gives them the control of the company. This narrows down the rights of the minority. And this restricts the …show more content…
For taking certain actions to defraud the company which included selling land at an increased price, two shareholders sued the directors and other shareholders of the company. It was held that as the board of directors was still in existence, that is was the board that should call a general meeting to make a claim in this instance, and therefore the claimants’ action could not stand. The minority shareholders right to protection or to make derivative claims is effectively denied by this …show more content…
Majority principle”, in which the will of the majority of the members of the company should in general, prevails in the running of its business. For example if a majority does not want to take action, because the wrong doing director or directors control the majority votes, a minority of shareholders must show the facts fall within an exception to the rule in Foss v Harbottle. This is one of the most established principles in company law.
There are three principles established in the case of Foss v Harbottle. They are:
1. The proper claimant principle; which provides that only company, and not the shareholders, can commence proceedings for wrongs committed against it. This principle mainly deals with company’s corporate personality.
2. The internal management principle; which provides that where a company is acting within its powers, the courts will not interfere in matters of internal management, unless the company itself commences proceedings. This principle mainly deals with the long-established reluctance to become involved in the internal affairs of
Before I start to write this paper, I want to ask one question. Can an individual shareholder complaint before a court, if some wrong has been done to the company? When this question is raised we have to know that the courts are mostly reluctant to interfere in the internal matters of the company. “It is not business of the court to manage the affairs of the company. That is for the shareholders and the directors” . From this statement we can understand that the control and power of a company is vested in the shareholders. Normally things are dealt by vote. So the majority shareholders have the majority voting powers which gives them the control of the company. This narrows down the rights of the minority. And this restricts the …show more content…
For taking certain actions to defraud the company which included selling land at an increased price, two shareholders sued the directors and other shareholders of the company. It was held that as the board of directors was still in existence, that is was the board that should call a general meeting to make a claim in this instance, and therefore the claimants’ action could not stand. The minority shareholders right to protection or to make derivative claims is effectively denied by this …show more content…
Majority principle”, in which the will of the majority of the members of the company should in general, prevails in the running of its business. For example if a majority does not want to take action, because the wrong doing director or directors control the majority votes, a minority of shareholders must show the facts fall within an exception to the rule in Foss v Harbottle. This is one of the most established principles in company law.
There are three principles established in the case of Foss v Harbottle. They are:
1. The proper claimant principle; which provides that only company, and not the shareholders, can commence proceedings for wrongs committed against it. This principle mainly deals with company’s corporate personality.
2. The internal management principle; which provides that where a company is acting within its powers, the courts will not interfere in matters of internal management, unless the company itself commences proceedings. This principle mainly deals with the long-established reluctance to become involved in the internal affairs of