The Rule of Majority is a principle of corporate democracy which dictates that the will of the majority of shareholders shall prevail in the management of a company.
Basis: This is based on the landmark case Foss v. Harbottle (1843). It holds that since the company is a separate legal person, it should act according to the decisions of the majority.
The "Proper Plaintiff" Rule: If a wrong is done to the company, only the company (acting through the majority) can bring a lawsuit.
Constraints: The majority cannot use their power to commit "Fraud on the Minority," act ultra vires, or violate the personal rights of individual shareholders.
No comments:
Post a Comment