Minority Shareholder Protection - Case law

Question 1

Barrett v Duckett [1995]

Answer 1

A minority shareholding may be as much as 50% (to exercise a minimum level of control 50%+ is needed)

Two owners, equal shares, one applied to court as a minority shareholder to remedy

Question 2

Carlen v Drury (1812) per Lord Eldon:

Answer 2

Courts’ non-intervention policy

The court is not required on every Occasion to take management of every playhouse and brewhouse in the Kingdom.

Question 3

judgement in Prudential Assurance
The rule in Foss v. Harbottle (1843)

Answer 3

Normally, a minority shareholder cannot sue in the name of a company for a wrong done to the company:

‘A cannot, as a general rule, bring an action against B to recover damages or secure other relief on behalf of C for an injury done by B to C. C is the proper plaintiff because C is the party injured, and, therefore, the person in whom the cause of action is vested.’

Question 4

Edwards v Halliwell [1950]
Two part rule in Foss v. Harbottle (1843) explained by Jenkins LJ

Answer 4

Firstly, the proper plaintiff in respect of a wrong alleged to be done to a company or an association of persons is prima facie the company or the association of persons itself.

Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that, if a mere majority of the members of the company or association is in favour of what has been done, then cadit quaestio.