Fraud In The Case Of Foss V. Harbottle

According to Salim and Kaur (2012), none of the member can sue to enforce the right of the company if it is a is a separate legal entity. Therefore, in order to avoid the multiplication issue on the suits on the same subject, the rule may now be justifiable.

In the case of Foss v Harbottle (1843) contains of two members from the company named Victoria Park Co and they brought up an action against the five director from the company and also the shareholders by pointing out several action that they took to defraud the company such as selling land at a higher price. According to the case, instead of the claimant, it is the board of director’s responsibility to held a general meeting to make claim in this instance. Jenkins LJ from the case of

There are various examples of fraud on the minority. Menier in the case of Menier v Hooper's Telegraph Works was a minority shareholder who complained that there are self-interested transaction occurs among the majority members and this lead to the problem where the fraud is about misappropriation of corporate assets. Then, the court then held that a minority shareholder's action was properly given in such circumstances. Another example that supporting the issue of fraud is abuse of power or discrimination is the case of Estmanco (Kilner House) Ltd v Greater London Council. This cases stated that, a minority can bring a claim even in the absence of complaint of fraud if it’s stated under the section. Whether the power is used intentionally or not intentionally, fraudulently or negligently by the directors in such a way that they are only benefits to the directors instead of the members, claims can be brought up by the members. Last but not least, Daniels v Daniels case is the other example of fraud can be seen on the issue of negligence which becomes beneficial to the wrongdoers. In this case three minority shareholders sued the two directors and minority shareholders decided to sell the land to Mrs. Daniels upon the company’s name at a lower price even though they know it worth more. It was held that it was right to sue in such a