Purpose of the rule - statutory provisions, Business Law and Ethics

Purpose of the rule:

It has been stated by various English judges that without the rule in Foss v Harbottle

(i)            There would be futile actions.

 A court order made on an application by an aggrieved minority of members (such as the two members of the Victoria Park Co.) would be made redundant by a resolution passed later on at the company's meeting confirming or ratifying what the minority had complained of in court.

 (ii) There is a likelihood of multiplicity of suits if each and every shareholder were to institute proceedings without any co-ordination with the others.

 (iii) The principle of corporate personality enunciated in Salomon v Salomon and Co. Ltd would be undermined.  Since a company is a separate legal person it is the company that has suffered a wrong but not its members.

(iv) The principle of majority rule would be violated.

 The law views companies as democracies of the majority shareholders. On the other hand whereas the thing complained of is a thing which in substance the majority of the company are entitled to do, or whether something has been done irregularly that the majority of the company are entitled to do regularly, or whether something has been done illegally that the majority of the company are entitled to do legally, there can be no utilize in having litigation about it, the ultimate end of that is only like a meeting has to be recognized, and then ultimately the majority gets its wishes" (per Mellish, L.J. in MacDougall v Gardiner).

Posted Date: 1/15/2013 2:59:13 AM | Location : United States







Related Discussions:- Purpose of the rule - statutory provisions, Assignment Help, Ask Question on Purpose of the rule - statutory provisions, Get Answer, Expert's Help, Purpose of the rule - statutory provisions Discussions

Write discussion on Purpose of the rule - statutory provisions
Your posts are moderated
Related Questions
Determine the central feature of politics Indeed this manipulation is a central feature of politics: "Problem definition is the active manipulation of images of conditions by c

Case Law Relating To Dividends: The above provisions of Table A supplement the following common law rules: 1)      Losses in previous years need not be provided for. Furthe

DISCLAIMER OF ASSETS: The liquidator has a statutory right of disclaimer of assets: s.135.  The rules are: (a)     he must obtain leave of the court; (b)     the right o

Law of Contract: Mr.Sakr who owns a factory in Baabda for manufacturing furniture, signed a contract in his factory in 12-7-2009 with Mr.Abdo who used to import woods from Bra

What are the Consensus in the political stream Political events move along at their own pace, and according to their own dynamics and rules. Developments in the political sphe

Requisites of Acceptance - Rules Relating To Acceptance Section number S.17 (2) provides like an acceptance is invalid unless since it complies with the following conditions:

QUESTION (a) Tom is 15 ½ and he has not eaten for three days because his parents did not have any money to buy food when he approached Mr. Taylor for a job in his factory and t

Following are different time zones in which the issue of Jammu & Kashmir could be divided: 1. 1947: when the dispute came up 2. 1948-1957: when the matter goes to UN, the su

Helen Brown's husband Mark was recently charged with an offence under the Welfare of the Community Act 1962 (Qld).  It is likely that Helen will be called as a witness against hi

State Article 22 of air and outer space law Article  22  states  that  all  the  States  should  prevent  unnecessary  delays  to  aircraft,  crews, passengers and  cargo,  esp