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s commercial opportunities may be manipulated to the majority's own ends.8Conceivably, the perpetrators conducting the fraud9in a position of controlling the company will in no circumstances commence an action against themselves. Under such circumstances, the individual shareholder should be in a position to bring a derivative action against the wrongdoer for relief. The seminal case of Foss v Harbottle10established the “proper plaintiff rule”, which means the Company itself, as a separate legal entity, 11has the correct legal standing to bring a petitionagainstwrongdoers. And also the “majority rule”12gives the majority shareholder a prevailing position over minority shareholders. It seems that minority shareholders have no correct standing to initiate suit to protect the interest of the company according to the Foss v Harbottle rule. Indeed, the shareholders' access to litigation enforcing the company's right is very restricted. In Edwards vHalliwell, the court held:

“First, the proper plaintiff in the action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association *Comp. Law. 3 of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, noindividualmember of the company is allowed to maintain an action in respect of that matter for the simple reason that, if a mere https://www.51lunwen.org/liuxuelunwendx/majority of the members of the company or association is in favor of what has been done, then cadet question.

 ”13The rule in Foss v Harbottle has achieved its judicial expectation largely by restricting excessive interference by frivolous and vexatious litigants14; thus the board of directors will not be distracted from their normal management duties. Nevertheless, if applied with full vigor, it would also prevent concerned shareholders from bringing actions against directors who have perpetrated wrongs to the company.

 

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