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: thecompany 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 (no- thousands-of-parasitic suits for the one corporate wrong); (3) the majority's authority (the internal-irregularities' cure belongs to the internal-sovereign); (4) the litigation's floodgates' bar (the speculator's-and-the malcontent's restraint); and (5) the finality-and-order (the corporate- governance's stability against the perpetual-challenge's paralysis).