Unit 4: Majority Rule and Protection of Minority Shareholders
4.1 Concept of Majority Rule
The corporation’s first grammar: the majority of the capital decides (the general meeting’s resolutions’ arithmetic — the one-share-one-vote’s world (with the Act’s-and-articles’ weighting faces)); the rule’s justification (the company’s-and-the shareholders’ collective-interest best-judged by the majority: the efficiency (the deadlock’s prevention), the personality’s logic (the company’s-will formed by the greater weight — Salomon’s person speaking), the market’s ratification (the majority’s-and-the-price’s checks)); the rule’s limits (the statute’s-reserved rights (the individual rights of 2.9), the articles’-protections, the honest-conduct floor — the majority rules the company’s business, not the minorities’ rights).
4.2 The Principle of Non-interference
The courts’-and-meeting’s abstention: the internal-management doctrine — the court will not interfere in the company’s-and-the majority’s internal decisions ex mero motu (the business-judgment’s respect; the meetings’-and-majority’s autonomy); the non-interference’s architecture: the regular-and-bona-fide acts of the majority are unchallengeable (the “irregularity-vs-fraud” line); the shareholders’ personal-and-specific remedies for the personal-rights; and the interference’s own gates (the statutory remedies: the oppression’s-and-the-derivative’s doors — the doctrine’s escape valves, not its abolition).
4.3 Justification and Advantages of Rule in Foss vs. Harbottle
The classic’s rule: Foss vs. Harbottle, 67 E.R. 189 (1843) — the proper-plaintiff principle: the company itself is the proper plaintiff for the wrongs done to the company (the company’s-sue-own-cause; the individual shareholder cannot sue for the company’s-and-all-shareholders’ injury); the majority’s ratification’s corollary (the majority’s-power to condone the internal irregularities — the shareholders’ own remedy through the meeting’s majority). The justification-and-advantages (the exam’s list): (1) the proper-plaintiff’s logic (the wrong-to-the-company suable-by-the-company — the Salomon’s-person consequence); (2) the multiplicity’s prevention
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