Legal protection - significant instances, Business Law and Ethics

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Legal Protection  - significant instances:

There are however a few but significant instances in which the Companies Act and the general law prescribe certain legal limits on the power of the majority to bind the minority of the company's members.  In particular, a resolution passed by the majority would not be allowed to prevail in certain circumstances if it is unfair or prejudicial to the minority, such as a resolution which -

(i) requires a member to take or subscribe for more shares than the number held by him at the date on which the resolution was passed

(ii) alters the company's objects;

(iii) reduces the company's capital in a way which is not "fair and equitable" between the different classes of shareholders;

(iv) empowers the company to embark on or continue with, a course of trading which was not contemplated by the minority at the time the company was being formed (in which case the court would be prepared to make an order for the winding up of the company on the ground that it is "just and equitable" to do so); or

(v) now there has constitutes "a fraud on the minority".


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