ABSTRACT
Applying this organ theory to the corporate law paradigm in Figure 2, it can be seen that the board of directors is the elected decision making arm of the corporation. However, when considering the theory in light of shareholders’ rights, a fundamental question arises:
This question was examined by the UK courts in John Shaw & Sons (Salford) Ltd v Shaw (1935) and, more recently, in Australia in NRMA Holdings Ltd v Parker (1986). The resulting common law principle has been in keeping with the concept of organ theory that, generally, shareholders cannot interfere with management decisions.
