Business Law Organisations Essay Example | Topics and Well Written Essays - 2000 words

Business Law Organisations - Essay physical exerciseSince unfairly prejudicial is not defined by the Act, this means that there are broad reasons wherefore a minority shareholder may puzzle a cause of accomplishment against a corporation, which effectively negates the constraints found by Foss. This paper will evidence Foss, will examine derivative actions, and will examine the Companies Act (2006), concluding that, while Section 260 of the Act does not provide shareholders with any more protective covering than what was had under Foss, section 994 does provide this protection. Foss v. Harbottle Even though shareholders are effective in holding directors accountable, the UK motor lodges fix a common law rule, delineated in Foss v. Harbottle (1840) 67 ER 189. In this case, two minority shareholders accused the defendants, who were the directors of a company called Victoria Park Company, of misapplying land, wasting land and obtaining improper mortgages, without the permissio n of the shareholders. The court in the Foss case dismissed the shareholders case, stating that only the company itself has a right to work on the directors. The reasoning for this qualification be best stated by the court in a subsequent case, Edwards v. Halliwell 1950 2 altogether ER 1064. The judge in this case states that the sound reason why minority shareholders cannot bring an action against directors is that, if there is only a minority bringing the case, it would mean that the majority of the company is in kick upstairs of what was done. Ramsay & Saunders (2006) state that there are two prongs to the Foss case one, it established the proper plaintiff who is the company itself two, it established the principle that directors should be independent and not subject to shareholder meddling into business affairs (Ramsay & Saunders, 2006). in that location are exceptions to the Foss rule. One is that the company did an illegal or ultra vires act. A shareholder can bring an a ction on this basis, because the majority cannot ratify an illegal or ultra vires act (Wedderburn, 1957 Cockburn v. Newbridge Sanitary travel Laundry Co. 1915 1 IR 237). other exception is that, if the company takes an action which, in the companys constitution, requires a special majority to take this action, then a minority shareholder may sue if the company takes this action in contravention to its own constitution (Black, 1983 Edwards v Halliwell 1950 2 All ER 1064). Berkahn (1998) states that another exception is that a shareholders personal rights hand over somehow been infringed by the corporation, indeed that shareholder has a right to sue for his personal rights infringement (Berkahn, 1998 Pender v Lushington (1877) 6 Ch D 70). Another exception is the fraud on the minority exception, which means that the wrong-doers actions amounts to fraud (Lo, 2004 Atwool v Merryweather (1867) LR 5 EQ 464n). Buckley (1976) states that this tolerate action is the only derivative acti on of the exceptions, as the first three exceptions involve personal actions. Therefore, accord to Maloney (1986), this action is the only true exception to Foss (Maloney, 1986). Statutory Actions Although Foss limited the actions that minority shareholders can take, statutory actions have restored many of the rights of the minority. One is that the Companies Act (2006) has given shareholder permission to bring