Foss Vs Harbottle Case Study

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1. FACT OF THE STORY FOSS V HARBOTTLE
The cases of Foss vs Harbottle was about the ability of the company to sue and became sued. In this case, two minority shareholders which are Richard Foss and Edward Starkie Turton bought an action towards the director of the company which is Victoria Park. This is because they found the director was misapplied the property of the company.
It was held that the company and its members are two different bodies and there are a veil between the company and its members. The shareholders or members of the company cannot enforce the right to sue because the company has ability to sue on its own name. Therefore, only the company can take the action against the director who had misused the company’s property. …show more content…

Under Section 20(2) and Section 20(3), the members are permitted to take an action against the company to restraint it performances. The members can restraint the ultra-vires act and can brought an action against the officers who authorized the transaction. Since the majority cannot rectified the ultra-vires act in Foss v Harbottle, the act was not ultra-vires according to the fact.

c) Personal right
In Memorandum of Association (MOA) or Article of Association (AOA) might be mention the right of the members in the company. The members have a right to protect the company from any damages. An action under this exception may be instituted directly against others members without associating the company as a joint defendant.
d) Special resolution
When the company is been managed in wrong way, it also can be resolved by ordinary resolution in general meeting. If in the article or statue provided that the act of the transaction can be approved by the consent of the majority shareholder that means the exception on Foss v Harbottle cannot be used.
e) Where the justice is required
It was the last exception of the rule in Foss v Harbottle where the justices of the case are required. This exception had been rejected by the United Kingdom but welcomed by the court in …show more content…

In this circumstances there are two rule held by the court. Firstly, the ‘proper plaintiff rule’ where only the company have power to take action when happen any wrong done to the company. Secondly, the ‘majority rule principle’ where the court cannot interfere when the wrong done can be ratified by the majority members during general meeting.
4. CASES WHO REFFERS FOSS V HARBOTTLE
• MALAYSIA
1. Abdul Rahim Bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd (1999) o In this case, the court held that this case refers to the first exception of the rule Foss v Harbottle which is fraud to the minority. There are a proved that the minority had been persecuted by the majority and evidence that the majority used their power into wrong way toward the company.
2. Tan Guan Eng v Ng Kweng Hee (1992) o This case was refers to the third exception to the rule of Foss v Harbottle which is the personal right. In this case, the personal right of the members had been interfered. The members who had been denied their right has ability to defend their right towards the company.

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