ABSTRACT
The consultation process leads to the 2006 Act the Law Commission recorded a number of criticisms of the rule in Foss v Harbottle and the derivative claim: Shareholder Remedies (Law Com 246, 1997). It recommends a partial abolition of the rule and a new derivative claim. The Company Law Review accepts this view. The Final Report recommends that derivative claims restrict to breaches of directors duties and that they put on a statutory footing. Prior to the Companies Act 2006 (CA 2006), the courts prepares to allow a derivative claim to proceeds where minority shareholders establish the fraud on the minority and that the wrongdoers were in control of the company: Cook v Deeks(1916). Responsibility for decision-making in a company lies with either the board of directors or the shareholders in general meeting, by consent of the majority. An individual shareholder initiates litigation to enforce personal rights in relation to the internal management of the company.
