Foss V Harbottle Case Study

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Individual assignment Introduction The case in this assignment is mainly talked about the issue of directors’ rights and duties and minority protection in the company. The case states that Ko invests $3 million as a joint venture with the partnership formed by Ho and Lo. They formed a new company named Lemon Limited. All the three people are directors and subscribe the same amount of shares. Hence, the profits and losses are also shared equally. After running for five years, Ho and Lo decide to acquire more retail outlets to generate more profit without consulting with Ko. Later, Ko learned that she cannot receive the salary due to debt-servicing burden caused by the business expansion. Capital growth of her investment substitutes the profit she should have. As a result, Ko wants to be bought out. However, Ho and Lo refuse. The following part of the assignment will analyze the main issue in the case and then give advice to Ko. Main Issue Analysis The first issue in this case is that Ho and Lo make the decision about expanding the business without consulting with Ko. Since all of them having shares of the company, as the directors, it is their right to exercise the voting right in general meeting for resolution. In this case, an ordinary resolution would…show more content…
According to the case Foss v Harbottle , it indicates the court policy that the court will not involve in the company’s internal affairs. Under majority control principles, Ko cannot bring her requirement to the court as the requirement can be ratified in the general meeting. However, to protect minority like Ko, there are exceptions to the rule in Foss v Harbottle at the same time and also the unfair prejudice action in New Companies Ordinance. Under some circumstances, single member can petition to the court to grant remedies. In the case, Ko’s situation satisfy those circumstances and she can use them to protect her

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