n Without Prejudice - The derivative action : company law
|Article Title||The derivative action : company law|
|© Publisher:||JetBlue Publishers (Pty) Ltd|
|Publication Date||Nov 2010|
|Pages||38 - 39|
The common law of companies has not afforded minority shareholder rights much protection. This has been due to various company law principles. First, a company, as a legal person independent from its shareholders, bears its own rights and responsibilities. Second, in the Foss v Harbottle judgement the court confirmed the 'majority rule' principle and stated that because of the majority's power to bind the minority, the courts will be hesitant to interfere in the running of the company as long as the majority acts lawfully. This principle in Foss v Harbottle was said to have been based on two components, namely that the company is the proper plaintiff that should sue and be sued in its own name regarding its own rights and duties; and also that that the court will not interfere with the internal management of the company.
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