Question

With reference to the Companies Act, 2019 (Act 992), decided cases, and established legal principles, critically analyze the rule in Foss v Harbottle [1843] 2 Hare 461.

a) The rule in Foss v Harbottle is a fundamental principle of corporate law.
b) Foss v Harbottle is not applicable in the Companies Act, 2019 (Act 992).
c) The Companies Act, 2019 (Act 992) overrides the rule in Foss v Harbottle.
d) Foss v Harbottle primarily applies to individual shareholders.

Answer 1

The rule in Foss v Harbottle is a fundamental principle of corporate law that states the company is the proper party to bring a lawsuit, not individual shareholders. The Companies Act, 2019 (Act 992) does not override this rule and provides provisions for individual or class actions by shareholders. The rule primarily applies to individual shareholders, but there are exceptions.

Step-by-step explanation:

The rule in Foss v Harbottle is a fundamental principle of corporate law. It states that if a wrong is done to a company, the company is the proper party to bring a lawsuit, and not individual shareholders. This rule is based on the principle of majority rule and the separate legal entity status of a company. It is applicable in common law jurisdictions, including Ghana where the Companies Act, 2019 (Act 992) is in force.

The Companies Act, 2019 (Act 992) does not override the rule in Foss v Harbottle. In fact, the Act provides provisions regarding legal actions that can be taken by shareholders individually or as a class, such as derivative actions and oppression actions. These provisions supplement the rule in Foss v Harbottle and do not eliminate its applicability.