n South African Law Journal - Revisiting the judge-made rule of non-interference in internal company matters
|Article Title||Revisiting the judge-made rule of non-interference in internal company matters|
|© Publisher:||Juta Law Publishing|
|Journal||South African Law Journal|
|Author||Jean J. Du Plessis|
|Publication Date||Jan 2010|
|Pages||304 - 327|
The main focus of this article is on the reasons why the courts have been reluctant to interfere in internal company matters. An analysis of numerous older English cases in particular indicates that these reasons vary considerably. These reasons are listed and discussed. Although it was never stated explicitly, the rule in Foss v Harbottle (establishing the proper plaintiff rule) provided one of the most convenient excuses for later courts not to consider the merits of internal company disputes. Hence, Foss v Harbottle established a strong precedent for non-interference in internal company matters. However, the article also examines other circumstances where the courts were prepared to interfere in internal company matters: these include several highly complex and often irreconcilable exceptions to the rule in Foss v Harbottle. Over time there was a shift away from the original reasons for non-interference by the courts to a more prominent focus on the powers of directors. This eventually led to the proper purpose doctrine. However, these developments were slow and took place over more than a hundred years.
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