Exception of the rules of FOSS V HARBOTTLE

The rule in Foss v. Harbottle is not absolute but is subject to certain exceptions. That are the exception of rule Foss V. Harbottle.

1. Ultra Vires Acts.

Where the company or its directors representing the majority of shareholders and perform any such activities which is not legal or beyond the power of the company MOA or Article shall be Ultra Vires Acts.

2. Fraud on Minority.

Where any act done by the majority shareholders amount to a fraud on the minority Shareholders. For example- Company sale its properties to related parties less than market price of the such properties.

3. Wrongdoers in Control

If the wrongdoers are in control of the company, the minority shareholders representative action for fraud on the minority will be entertained by the court

4. Resolution requiring Special majority but is passed by a simple majority.

A shareholder can sue if an act requires a special majority but is passed by simple majority

than in case minority single shareholder can also file sue against the company.

5. s

Individual membership cannot be invaded by the majority of shareholders. He is entitled to all the right and privilege appertaining to his status as a member. An individual shareholder can insist on the strict compliance with legal rules statutory provisions.

6. Breach of duty

The minority shareholder may bring an action against the company, where although there is no fraud, there is a breach of duty by directors and majority to the detriment of the company.

Exception of Foss v. Harbottle rules

Following is the situation where minority shareholder or shareholders can file sue against the company.

Above these are the exceptions of the RULL OF MAJORITY SHAREHOLDER.

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