Introduction A derivative claim is a claim by a member of a company in respect of a cause of action vested in the company and seeking relief on behalf of the company and was established as an exception to the rule in Foss v Harbottle. The derivative action protects the minority shareholders by allowing them to bring an action on behalf of the company (after they got a leave from the court) where the company itself was not pursuing because the wrongdoers were in control and preventing it from initiating an action against them. They seem to be given an opportunity to ‘stand up’ to preserve their interest indirectly and seek the justice for the company as a whole. By bringing this corporate remedy, they may remain as a member of the company and they have a possibility of having an indemnity for cost (as in the judgment of Wallersteiner v Moir (No 2) : the court may order the company to pay the plaintiff’s cost as the benefit of a successful derivative claim will accrue to the company and only indirectly to the plaintiff as a member of the company). Discussion on sections 260-264 Sections 260-264 of Companies Act 2006 (the Act) can be considered as ‘new regime’ for regulating derivative actions supersedes the common law derivative action. Under the Act, a derivative action may be brought only under statute , by any member , against any director (including former and shadow directors) and other persons implicated in the breach , former directors are included and/or in respect of negligence, default, breach of duty and breach of trust by a director of the company. The Act allows negligence as the sole ground unlike common law which required the claimant to establish ‘fraud’ even if negligence existed. It is believed that the ‘d... ... middle of paper ... ...ust make an allegation of negligence”. It seems too easy for the shareholder to bring the action without knowing their hidden agenda. Second, the courts will be more involved with companies' internal management as they are given the full power of giving permission on a derivative action. Besides that, the filtering process is a time-consuming and will affect the interest of the company. Third, even after the prima facie case has been proven, the court must dismiss the claim if it falls under section 263(2). Lastly, when it regards to the court’s discretion whether to allow the claim to proceed, the court has to spend more time to analyze the requirement of good faith, various combinations of interest within the company as a whole, the views of the independent members, the ratification analysis and accordingly shifting away to the nature of the wrongdoing itself.
The decision in Equuscorp is significant, as it has made clear several principles that were once ambiguous under Australian law. It ratifies that restitutionary remedies are unavailable for a claim for money had and received where recovery would reduce coherence in the law. Furthermore, Equuscorp has confirmed that a bare cause of action can be assigned where the assignee has a genuine commercial interest in its enforcement.
R v International Stock Exchange of the UK and the Republic of Ireland Ltd, ex p Else (1982) Ltd and others [1993] 2 CMLR 677
Axiak v Ingram (2012) 82 NSWLR 36 (Axiak) was extremely pertinent, standing as the “only decision of this court dealing with the construction of the blameless accident provisions of the MACA”. Critically, the case established that ‘non-tortious negligence’ is excluded from the MACA’s definition of “fault” in s3. Such provisions artificially place fault upon the driver in order to secure CTP claims for victims.
The plaintiff, Cigna Health, owned shares of Audax’s Series B Preferred Stock. In 2014, a majority of Audax’s board and 66.9% of the shareholders approved the merger. The shareholders approved the merger via written consent delivered in the form of support agreements, which included a release of any claims against Optum, an agreement to be bound by the terms of the merger agreement, and an appointment of a stockholder representative. Cigna did not vote in favor of the merger and did not sign the support agreement. The merger agreement required surrender of shared and execution of a Letter of Transmittal in order for a shareholder to receive the merger consideration. The Letter of Transmittal contained a separate release obligation that did not appear in the merger agreement but only appeared in the Letter of Transmittal, and required that stockholders surrendering their shares agree to the obligations contained in the merger agreement, which included an indemnification
Mark A. Kornfeld, (2014), Tracking New Developments in Securities Litigation, Aspatore, WL 1245076. Retrieved from: https://1-next-westlaw-com.proxy1.library.jhu.edu/
This is actually an example of mixed corporate governance. There are independent board members in order to make sure that the operational and financial health of the company can gauged accurately from time to time. Peter Langerman did an in depth enquiry into the financial matters just because Dunlap had offered to resign in response to a trivial question. The board should have kept a watch on the firm’s financial health from the beginning. But after realising the gravity of situation, board was prompt and unanimous in firing Albert Dunlap which shows good corporate governance.
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
Tort is a wrong that involves a breach of civil duty owed to someone else.
Negligence, as defined in Pearson’s Business Law in Canada, is an unintentional careless act or omission that causes injury to another. Negligence consists of four parts, of which the plaintiff has to prove to be able to have a successful lawsuit and potentially obtain compensation. First there is a duty of care: Who is one responsible for? Secondly there is breach of standard of care: What did the defendant do that was careless? Thirdly there is causation: Did the alleged careless act actually cause the harm? Fourthly there is damage: Did the plaintiff suffer a compensable type of harm as a result of the alleged negligent act? Therefore, the cause of action for Helen Happy’s lawsuit will be negligence, and she will be suing the warden of the Peace River Correctional Centre, attributable to vicarious liability. As well as, there will be a partial defense (shared blame) between the warden and the two employees, Ike Inkster and Melvin Melrose; whom where driving the standard Correction’s van.
In our given scenario we are asked to discuss legal principles influencing the likelihood of any successful action against Steve in the grounds of negligence. Steve’s negligent driving caused a series of events that caused losses to the other people presented in the scenario and they take actions against Steve in the grounds of negligence. At first we must understand what negligence is. The tort of negligence provides the potenti...
The unfair prejudice petition has always been regarded as the easier and more flexible option for minority shareholders’ protection compared to the statutory derivative action. The restrictive leave requirements under the statutory derivative claim where the concept of prima facie, good faith and ratification have been interpreted within the confines of the origins in the case of Foss v Harbottle do not add any appeal the statutory derivative claim. Further, the approach in relation to granting indemnity costs orders which is rather limited does not in any way encourage any potential claimant to pursue a derivative action. Recent cases which allows corporate relief to be obtained via unfair prejudice petition and even the possibility if recovering costs under and unfair prejudice petition has further relegated the significance of the derivative action.
It is concluded that neither of the above proposals are adequate in that any practical benefit that results from the proposal such as employee and shareholder engagement are outweighed by the theoretical impact of increasing the overlap of the organs which would alter the structure of company law. The legal side of directors’ remuneration appears to be sufficient with the directors’ duties legislation acting as an efficient preventative measure for the problems that directors’ remuneration creates. Furthermore, shareholders already must approve several payments as such this could be strengthened to tackle the issue and employees are to some extent taken care of within s172 as such it is these sections that need development rather than directors’ remuneration.
Even though the principal does not authorize, ratify, participate in, or know of the misconduct, he/she may be held for an agent’s tort committed in the course and scope of the agent’s employment. As noted in Case Study 1, an agent is to comply with all lawful instructions received from the principal and persons designated by the principal concerning agent’s actions on behalf of the principal. A principal who is under a duty to provide protection is subject to liability to such others for harm caused to them by the failure of such agent to perform the duty. A principal is not relieved from the separable part of a contract which he/she authorized the agent to make by the fact that the agent under took. Even where the agent’s unauthorized act constitutes a fraud on both the principal and the third person, the partial validity rule is applicable.
The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real connection. Throughout the course of this assignment I will begin by explaining the concept of legal personality and describe the veil of incorporation. I will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions such as s.24 CA 1985 and incorporate the varying views of judges as to when the veil can be lifted.
The concept ‘derivative action’ is not something new to common law. It was developed as an exception to the rule laid down in Foss v Harbottle, an 1846 case. It is an equitable remedy that is resorted to by a shareholder when there is no proper remedy available. A derivative action refers to a claim made by a shareholder of the company on its behalf when the company is disabled from doing so due to the wrongdoers controlling it.