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UK Company Law: Minority Shareholders Protection

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  1. Introduction
  2. Regulating the exercise of power
  3. Common law
  4. Brown v British Abrasive Wheel Co. Ltd (1918-1919)
  5. O'Neill v Phillips (1999)
  6. Cases
  7. Conclusion

Northwest Transportation Company Ltd v Beatty (1887): the case involving ratifying breach of duty regarding self-dealing. The courts held that controlling shareholder-director can vote in favour of ratifying the breach. However, there are two restrictions: (i) directors cannot commit illegality, fraud and oppression and (ii) some rational basis for the decision.

Cook v Deeks (1916 Privy Council case): the case involving taking a corporate opportunity. The courts held that controlling shareholder-directors cannot ratify the breach of their duty. However, in Regal (Hastings), the court suggests that the controlling shareholder-director can ratify the breach of duty in relation to a corporate opportunity. How can we explain this? One could argue that in Regal (Hastings), the director acted bona fide for the best interest of the company and the company was not detrimentally affected but in Cook v Deeks the director's act detrimentally affected the company and benefit the directors personally.

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