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Company Law and its results - Case Study Example

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The first issue is relating to the resolution brought by Jamal holding 10% shares insisting that the company for the payment of dividend and also on his dislike on the style of management by Boss and Harris.
This is the case of majority shareholders exploiting the minorities…
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Company Law and its results

Download file to see previous pages... In this case Jamal is not only the director but also is the shareholder of the company. The intended resolution brought by Jamal relating to payment of dividend and his dislike on the style of management reflects the oppression of the minority by the majority represented by Boss and Harris.
As has been decided in the above case, when a wrong is committed to a company, only the company is the proper person to bring an action for damage. Since the directors control the company and it is the directors whose conduct is the issue now, only the shareholders have to bring an action in the name of the company. There are certain rules established in the case of Foss v Harbottle. They are:
2. The second rule relates to 'internal management' of the company where the action complained of is something which the majority is entitled to then the action for legal remedy can be brought by the majority only. Relevant cases are:
Jamal may not be in a position to bring any action against the remaining directors as the company is the only proper person for taking action against the directors. According to the second rule laid down in Foss v Harbottle since Boss and Harris represent the majority, only they are entitled to bring action if any for remedy. The complaint from Jamal does not fall within the exceptions to the rule laid down in Foss v harbottle as there is no apparent fraud committed by Harris and Boss representing the majority.

Issue 2:
Resolution brought by Boss and Harris for the removal of Jamal as a director
It is possible that a company by ordinary resolution remove a director before the end of his period of office. Such an action may be brought under section 303 of the Companies Act 1985 notwithstanding anything contained in the Articles of Association of the company or anything contained in any agreement between the company and the director.
The removal of a director under section 303 will not deprive the director of his right for compensation or damages payable in respect of the termination of his appointment as director. The director will also be entitled to his right of compensation in respect of the termination of any other appointment.
It is obligatory for the company to issue a special notice of the resolution intended to be passed in the general meeting for the removal of a director or to appoint another in the place of the director removed at the meeting in which the director is so removed.
Under section 304 on receipt of the notice of an intended resolution to remove a director under ...Download file to see next pagesRead More
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