10. Members Protection(2).pptx

10. Members Protection(2).pptx - COMPANY LAW BAB 2202/LAW...

Info icon This preview shows pages 1–14. Sign up to view the full content.

View Full Document Right Arrow Icon
COMPANY LAW BAB 2202/LAW 2034 MEMBERS’ RIGHTS AND REMEDIES
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
SUNWAY UNIVERSITY Members’ Rights and Remedies
Image of page 2
Enforcement of corporate rights The ‘proper plaintiff’ rule A company as a separate legal entity – no member can sue to enforce a company’s rights. Foss v Harbottle (1843) Two minority shareholders brought an action against the majority directors for misapplication. Held: an injury was not to the plaintiff but to the company SUNWAY UNIVERSITY
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Enforcement of corporate rights In his judgment in Foss v. Harbottle , Wigram VC was the first to state plainly that the court will not intervene where a majority of the shareholders may lawfully ratify irregular conduct. This was the basis of the notion that the proper plaintiff is the company itself. SUNWAY UNIVERSITY
Image of page 4
Enforcement of corporate rights The rule also may be justifiable on practical grounds – to avoid multiplicity of suits on the same subject matter SUNWAY UNIVERSITY
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Issues to consider Proceedings must be in the interests of the company. Conflicts of powers between: 1. Directors inter se 2. Directors and shareholders 3. Minority and Majority SUNWAY UNIVERSITY
Image of page 6
‘Exceptions’ to the rule in Foss v Harbottle a member’s personal rights are infringed eg wrongful removal as a director – Alphonsus Hii Heng Tuong v Lok Min Wah (1995) The company acts ultra vires e.g. Hawkesbury Development v Landmark Finance (1970) SUNWAY UNIVERSITY
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
‘Exceptions’ to the rule in Foss v Harbottle Majority members contravene the memorandum & articles, a contract among the members inter se – s 33(1) The right to object to an alteration of the articles – e.g. Lim Hean Pin v Thean Seng Co [1992] SUNWAY UNIVERSITY
Image of page 8
‘Exceptions’ to the rule in Foss v Harbottle Excluding a member’s right to vote – e.g. ibid To petition for relief under s 181 – e.g. Ting Chong Maa v Chor Sek Choon [1989] SUNWAY UNIVERSITY
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
A summary… The Rule in Foss v Harbottle Fraud ‘justice of the case’ S181 The Unfair Prejudice remedy The Derivative Action ‘Exceptions’ SUNWAY UNIVERSITY
Image of page 10
‘Exceptions’ to the rule in Foss v Harbottle There is a fraud on the minority & the wrongdoers are in control of the co. – Lord Davey in Burland v Earle [1902] a mere matter of procedure in order to give a remedy for a wrong which would otherwise escape redress…. SUNWAY UNIVERSITY
Image of page 11

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fraud on the Minority Fraud refers to: in the equitable sense – where there is an abuse of power – Estmanco v Greater London Council [1982] – Megarry VC Abd Rahim v Krubong Ind. Park [1995] – no need to prove dishonesty…- Gopal Sri Ram JCA SUNWAY UNIVERSITY
Image of page 12
Fraud on the Minority Prudential Insurance Co. Ltd v Newman Industries Ltd (No. 2) “There is an exception to the rule where what has been done amounts to fraud and the wrongdoers are themselves in control of the company. In this case, the rule is relaxed in favour of the aggrieved minority, who are allowed to bring a minority shareholders’ action on behalf of themselves and all others. ….
Image of page 13

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 14
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern