ENFORCEMENT OF CORPORATE RIGHTS-THE RULE IN FOSS v HARBOTTLE: DEAD OR ALIVE

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Abstract

The principle on the enforcement of a corporation’s right of action which is encapsulated as the rule in Foss v Harbottle has continued to attract discombobulating academic and judicial comments in defining the scope and exceptions to that rule. The recent statutory interventions which are witnessed in the UK and South Africa by redefining the right of the minority shareholders and other persons to intervene in the corporation’s right of action are seen by some writers as having extinguished the flame ignited by the decision in Foss v Harbottle. A detailed examination of the real purport of Wigram VC’s pronouncement in that case is undertaken, streamlining the rule and the subsequent decisions of courts carving out rooms for departure from the rule. The paper argues that the statutory interventions in jurisdictions under discussion only borders on derivative action which is an exception to the rule. The effect of those statutory provisions on the rule itself is not too significant as would justify the suggestion that the rule is now extinct. Thus, the paper concludes that the rule in Foss v Harbottle remains the principal approach to the enforcement of a corporation’s right of action.

Keywords: Corporate Rights, Derivative Action, Enforcement Common Law, Statute

How to cite this paper: Nwafor, A. O. (2016). Enforcement of corporate rights-the rule in Foss v Harbottle: Dead or alive. Corporate Board: role, duties and composition, 12(1), 6-14. https://doi.org/10.22495/cbv12i1art1