Preview

INSIDER DEALING IMPORTANT FILE

Good Essays
Open Document
Open Document
3255 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
INSIDER DEALING IMPORTANT FILE
What is Minority Protection?
The protection afforded to minority shareholders by which to assert the rights of the company in an action for a wrong that is alleged to have been done to the company by the majority.

Bit of history: Under the law as it stood until recently, aggrieved minority shareholders generally found it easier to kill off the company by petitioning for its winding up under the just and equitable ground. This was because of the procedural obstacles established in Foss v Harbottle

Case law concerned:
Foss v Harbottle – which concerned the misapplication of the property of the company by the directors. Since the claimants could not satisfy the liabilities or wind up the affairs of the company, they sought to complain of the losses and expenses occasioned by the acts of the defendants.
It was held that in “any legal proceedings in which a wrong is alleged to have been done to a company, the proper claimant is the company”. Although logical on its face, the rule presented multitudinous frustration for courts over the years.

What is the basis of the rule in Foss v Harbottle?
The court will not ordinarily entertain an action brought on behalf of the company by a shareholder. As identified in Carlen v Drury by Lord Eldon in which he declared that, “the court is not required to be on every occasion to take the management of every playhouse and brew house in the Kingdom”.

WHY?
To prevent a multiplicity of actions, which in return may make the courts order ineffective.

What academics have to say about Foss?
Sugarman acclaimed on the Law Commission’s consultation paper on shareholder remedies 1997, that the rules governing shareholder remedies in English company law are notoriously convoluted. Towering over this area, like Frankenstein’s monster, stands the legacy of Foss v Harbottle. While not a gothic novel, it has nonetheless generated its own horror stories of unfulfilled rights and ruinous litigation.

Exceptions to the rule:
It has long been

You May Also Find These Documents Helpful

  • Good Essays

    Article 6135 states that “In suits by or against unincorporated companies, whatever judgment shall be rendered shall be as conclusive on the individual stockholders and members thereof as if they were individually parties to such suits.” This information itself revealed that the trial court was justified in its decision. Article 6137 further enhanced the argument in stating: "service of citation may also be had on any and all of the stockholders ... and [judgment] shall be equally binding upon the individual property of the stockholders…" Both of the supporting articles set precedence that reinforced the argument that Holberg, as the sole stockholder, was bound by the judgment of the…

    • 652 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    HCC 40, PC 3: Court Case

    • 745 Words
    • 3 Pages

    .Rule: The court may disregard of the corporation by it`s shareholders so that the corporation is not acting in the best interests of the corporation "Alter…

    • 745 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Legt 2741 Assignment

    • 1787 Words
    • 8 Pages

    Firstly it must be emphasised that through incorporation J is a separate legal entity from its founder, shareholders and directors as demonstrated in the landmark case of Salomon v Salomon & Co Ltd . Lord Halsbury LC made the judgement that once a company is legally incorporated it must be treated as a separate legal entity. This important legal principle is accounted for in the Corporations Act 2001 s124(1) which states that “a company has the legal capacity and powers of an individual” .…

    • 1787 Words
    • 8 Pages
    Good Essays
  • Good Essays

    Hanrahan, P., Ramsay I., Stapledon G., Commercial Applications of Company Law. CCH 11th edition 2010…

    • 1621 Words
    • 7 Pages
    Good Essays
  • Best Essays

    This paper examines the development and scope of accessory liability under the second limb of Barnes v Addy as it stands in both England and Australia. As to the law in England, the focus will be on the rearticulation of the principle of accessory liability under the second limb as stated in Royal Brunei Airlines Sdn Bhd v Tan. In particular, it will consider the extent to which the decision has reconciled inconsistencies in earlier authority and remedied those issues propounded to be inherent in the traditional formulation of the principle. At this stage, this traditional principle remains good law in Australia. However, as suggested in Farah Constructions Pty Ltd v Say-Dee Pty Ltd, there is potential for the English approach to be adopted in the Australian context. Such an adoption may be advisable in light of the judicial and extra-judicial commentary suggesting that the orthodox approach is in fact not properly aligned with equitable principles. The discussion of this possibility involves not only an assessment of the advantages and disadvantages of each approach, but also a determination as to the extent to which the separate application of each approach could result in a divergent outcome.…

    • 3483 Words
    • 14 Pages
    Best Essays
  • Powerful Essays

    Busting Trusts 1. Hepburn Act 2. Clayton Anti-Trust Act B. Protecting Consumers and Workers 1. Pure Food and Drug Act 2. Arbitration 3.…

    • 327 Words
    • 2 Pages
    Powerful Essays
  • Powerful Essays

    In District Court, Plaintiffs alleged securities fraud by claiming that Defendants violated Rule 10b-5 by making material misstatements about the value of the C-US profits interests and a tax “gross up” to induce Plaintiffs’ continued employment at Covis Pharmaceuticals, Am. Compl. ¶ 23. By the failure to pursue it in their opening brief, the plaintiffs abandoned the theory of securities fraud. Regardless, under the Private Securities Litigation Reform Act…

    • 650 Words
    • 3 Pages
    Powerful Essays
  • Powerful Essays

    The course will cover the structure and governance of the corporation and the division of corporate powers; the duties and liabilities of directors and other officers; the remedies available to shareholders for the enforcement of director’s duties and protection against oppression or overreaching by controllers. The course considers these legal doctrines and theoretical perspectives as they relate to both public corporations and to small incorporated businesses.…

    • 3601 Words
    • 24 Pages
    Powerful Essays
  • Powerful Essays

    The House of Lords in Salomon v Salomon1 affirmed the legal principle that, upon incorporation, a company is generally considered to be a new legal entity separate from its shareholders. The court did this in relation to what was essentially a one person company. Windeyer J, in the High Court in Peate v Federal Commissioner of Taxation,2 stated that a company represents:…

    • 15226 Words
    • 61 Pages
    Powerful Essays
  • Good Essays

    Like I mentioned before, litigation is time consuming and expensive. Naturally, one of the parties…

    • 1625 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    1. List and describe at least three (3) technologies that allow an individual to research citizens’ private data.…

    • 1849 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    2. Maclntyre, Ewan. "The Law of Torts 1." Introduction to Business Law. 2nd ed. Essex: Pearson Education, 2012. 258-304. Print.…

    • 1268 Words
    • 6 Pages
    Better Essays
  • Better Essays

    American Cyanamid essay1

    • 1357 Words
    • 4 Pages

    Prior to the decision in American Cyanamid it was well established that the claimant had to show a strong prima facie case that his rights had been infringed. Lord Upjohn further articulated this in the case of J.T. Stratford and Sons v Lindley, where he noted that the applicant had to first establish that there was a prima facie breach of duty by the respondent to him. In other words,…

    • 1357 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    company law

    • 2240 Words
    • 9 Pages

    Changes of shareholder or director are allowed as the company considered going concern. The share of any member was movable and transferable. In the case Symington v. Symington’s Quarries Ltd, it was judge that a partnership business carried on by three brothers who decided to transfer it to a private limited company. A resolution was passed in…

    • 2240 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Role Off Company Secretary

    • 2084 Words
    • 9 Pages

    There is a requirement to appoint company secretary. It is already understood that a company is the creation of law, having rights, duties and obligations just as that of human being. The so-called legal entity may therefore sue and be sued: Saloman’s case. But because of the abstract nature of a company as a ‘person’ it becomes necessary that directors be put in place to see to the effective running of the corporation. However, the directors are not required to be lawyers nor know anything about the company law. In the same regard, the prompters of the company need not be lawyers or know anything about company law. But a company being an artificial person, created by operation of law, must subsist as a person on law – it must continue to obey the provisions of the law since it derives its existence as a person from it.…

    • 2084 Words
    • 9 Pages
    Powerful Essays