Foss V Harbottle Rule

Summary

The rule in Foss v. Harbottle is a key principle in corporate law, stating that only the company itself can sue for wrongs done to it, not individual shareholders. This rule helps maintain the companys autonomy and prevents unnecessary litigation. However, there are exceptions, such as when the majority shareholders commit fraud, actions are beyond the companys powers (ultra vires), or when personal rights of shareholders are violated. These exceptions allow minority shareholders to take legal action in specific circumstances. Understanding these principles is crucial for navigating corporate legal issues.

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explain and illustrate the rule in foss v harbottle
The rule in Foss v. Harbottle is foundational in company law, emphasizing that:
- Only the company, not individual shareholders, can sue for wrongs done to the company.
- Shareholders cannot sue if the alleged wrong can be ratified by a simple majority of shareholders.
Would you like more details on exceptions to this rule?
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Here are some exceptions to the rule in Foss v. Harbottle:
- Fraud on the Minority: If the majority shareholders commit fraud, minority shareholders can sue.
- Acts Ultra Vires: Actions beyond the company's powers can be challenged.
- Violation of Personal Rights: If personal rights of shareholders are violated, they can sue.
Would you like more details on any specific exception?