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The relationship of the rule in Foss v. Harbottle to the statutory remedies for minority shareholders

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Griggs, Lynden (1993) The relationship of the rule in Foss v. Harbottle to the statutory remedies for minority shareholders. Research Master thesis, University of Tasmania.

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Abstract

In this thesis I consider the problem of the minority shareholder in the private
corporation who seeks to recover compensation on behalf of the company
where the wrongdoers are in control and thus prevent any action being taken.
At common law the minority shareholder was severely restricted by the Rule
in Foss v. Harbottle. This stated that the company was the proper plaintiff for
wrongs done to it and that internal irregularities could be cured by the
company in general meeting. From this various exceptions developed to allow
the minority shareholder the right to bring a derivative action on behalf of the
corporation. The conditions to allow this to happen were, however, extremely
restrictive. Accordingly various law reform committees recommended the
introduction of statutory remedies to alleviate the problems of the minority
shareholder. In Australia, the principal statutory remedy introduced was the
oppression remedy, now contained in s.260 of the Corporations Law. This
remedy has suffered from a number of defects. The judiciary has given s.260
a more narrow scope than was arguably intended and there are a number of
problems with the wording of the section and its interrelationship with other
areas of the law. It is therefore apposite to consider the alternatives offered to
the minority shareholder in England, Canada and the United States, as well as
other common law options available in Australia. These options including the
personal action by the minority shareholder to recover on the basis that there
has been a breach of the constitution of the company and/or an action in tort.
Both Canada and the United States have developed a procedural framework to
allow shareholders to bring a derivative action and this appears to provide the
member with easier access to the courts than the present Australian options.
Finally, I conclude by submitting that the existing avenues; the oppression
remedy, the personal action and the tortious remedy do not provide convenient
avenues for the minority shareholders to pursue wrongs to the corporation by
those in control and that Australia would benefit from the introduction of the
statutory derivative action.
The law is stated as at 31/8/1992.

Item Type: Thesis (Research Master)
Keywords: Minority stockholders, Stockholders' derivative actions
Copyright Holders: The Author
Copyright Information:

Copyright 1993 the Author. The University is continuing to endeavour to trace the copyright owner(s) and in the meantime this item has been reproduced here in good faith. We would be pleased to hear from the copyright owner(s).

Additional Information:

Thesis (LL.M.)--University of Tasmania, 1993. Includes bibliographical references (leaves 241-259)

Date Deposited: 09 Dec 2014 00:00
Last Modified: 11 Mar 2016 05:55
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