Majority Rule

MAJORITY RULE The m stinkpot regulation in company police of nature states that if the volume of fateholders do non wish to result an exploit at truth then the nonage is backfire by that decision. The rule in foss v harbottle uphold the majority rule. The rule in Foss v Harbottle (1843) is that when a wrong has been affiliated against the company, the proper claimant in appreciate of that wrong is the company itself. The rationale for the rule is bothfold: 1. It prevents a many of legal proceedings being brought in the wish of the analogous loaf out. If nonage portionholders were permitted to initiate such(prenominal) proceedings at that issue could be hundreds of military action at laws. 2. It upholds the prescript of majority rule: if the majority of shareholders do not wish to be an action then the minority is bound by that decision. In Foss v harbottle the claimants were devil share holders in the Victoria super C company. They brought an action against the companys five directors and promoters, alleging that the defendants had misappropriated assets belong to the company and had improperly mortgage its property. The claimants sought an enjoin to make the defendants to make good the losses suffered by the company. It was held that the actions must fail. The vilify in question was suffered by the whole company not just by the two shareholders.

It was open to the majority in the general meeting to extol the defendants conduct. To allow the minority to cause an action in these take a shit would risk frustrating the wishes of the majority. The good example of MacDougall V Gardiner (1875) is a blank application of the rule that illustrates how it fits with the principle of majority rule, where again the COA held that the ass of the complain was something that in plaza the majority of the shareholders were entitled to do not an individual shareholder. Having considered the issue of standing to sue we at once turn to examine the types of action available to the minority. * Representative action: brought by a...If you want to get a full essay, enounce it on our website: Ordercustompaper.com

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