Talk:Foss v Harbottle

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Some notes from a Law lecture on this

What happened

Company was setup
Original incorporators sold their assets (land) to the company
They did this at a significant overvaluation
One of the other shareholders was unhappy about the company purchasing these assets at a significant overvaluation.
The damage was done to the company, not to the shareholders
Thus the shareholders..can’t sue as the breach was not done to the shareholders, it was done the company, and the company would need to sue
Before the company would sue, it would need the consent of the directors (effectively they need to “sue themself, which they would not allow. Hence the problem
The court ruled the shareholders can’t sue on behalf of the company

Ruling

Can’t pick and choose the when the circumstances suit to negotiate this. Company can choose to ratify these actions Shareholders can not take action against the company.

Exceptions

Insider trading. Original interpretation, was a wrong to the company, not the shareholder.

Personal wrong. If the wrong was specifically done to you, then you can sue. Creates a personal right of action.

Fraud. Needs to be very serious, bordering on criminal. Individual shareholders have a right of action.

Special Resolution. Would be required to sanction an action. Normally you need a 50% agreement for most transactions, if special resolution = 75% necessary, then shareholder can take action.

infobox picture

The infobox says:

| name = Foss v Harbottle | court = Court of Chancery | image = EdgarWoodBuilding.jpg | date decided = Edgar Wood building, Victoria Park, Manchester

The picture, http://en.wiki.x.io/wiki/File:EdgarWoodBuilding.jpg, is of this building http://en.wiki.x.io/wiki/Edgar_Wood_Centre. The case was decided 1843. The building started construction in 1903, and its initial purpose was as a church. The building is not a date, not the court, not designed by any of the defendents, so it's not clear what relevance if any it has to the subject of the article. (Even if it looks quite nice and is 10 minutes down the road from Victoria Park.) 2A00:81C0:0:20:6631:50FF:FE3B:8A49 (talk) 15:26, 2 June 2017 (UTC)[reply]