The Common Law Derivative Action in Hong Kong

This essay will explain the concepts of separate personality and limited liability and their significance in company law. The principle of separate personality is defined in the Companies Act 2006(CA) ; “subscribers to the memorandum, together with such other persons as may from time to time become members of the company are a body corporate by the name contained in memorandum.” This essentially means that a company is a separate legal personality to its members and therefore can itself be sued and enter into contracts. This theory was birthed into company law through the case of Salomon v Salomon and Co LTD 1872. This case involved a company entering liquidation and the unsecured creditors not being able to claim assets to compensate them. The issue in this case was whether Mr Salomon owed the money or the company did. In the end, the House of Lords held that the company was not an agent of Mr Salomon and so the debts were that of the company thus creating the “corporate Veil” .

The thesis deals with the above concepts and discusses how the Companies Act 71 of 2008 (the Act) modified the law, particularly, by extending the legal capacity of a company and extinguishing or modifying the above rules which had previously restricted a company's ability

Rule 23.1 governs derivative suits in which a plaintiff seeks to assert a right belonging to a corporation (or similar entity) in which the plaintiff is a shareholder, on behalf of the corporation that is not pursuing the claim itself. Rule 23.2 governs actions by or against unincorporated associations (Rule 23, 2009).

In R v. Redfern & Dunlop Ltd. (Aircraft Division) , the Court held that where the employees who were not in the decision making level could not be identifiable with the company and therefore were not deemed to be the controlling mind of the company. The question that comes up is that if a person at a lower level commits a crime in the name of the company, the company cannot be held liable for the same. This may pose to be a problem in the sense that the company may make a division between the senior management and the employees to avoid criminal proceedings against them

Firstly, we will consider the customary character of the introductory phase and sub-paragraph (a) of paragraph 1. The customary character of the introductory phase and sub para 1 (a) was never in question, both State practice and opinion juris clearly show that these initiatives had a lege ferenda character. Furthermore, subsequent practice also confirmed the customary character of the provision. However, with regard to the customary character of paragraph 1 (b) and 2 there exist several controversies. It was only introduced at the last moment, as an amendment by the UK and had been adopted by a very narrow margin. Paragraph 1 (b) of Article 56 states that certain treaties by their “nature” contain implied denunciation clauses but it does indicate which those treaties are. As a result, in order to identify these categories of treaties which is the raison d’etre, of subpara. 1(b), one turns to custom. Hence, the existence is customary law of a single category of treaties of this nature would suffice to show the customary character of 1(b). Therefore, Article 56(1) does show customary character of

The three common exceptions to the exclusionary rule are the good faith exception, the inevitable discovery exception, and the

Another argument that is made regarding corporations having individual rights revolves around the legal right for a company to sue and be sued in the court of law.

Your honors, this case is about the fundamental right of shareholder protection. The right of a small businesswoman to pursue her goals and not be punished for her initiative and contribution that is so essential to American business. That is the right

Facts: To resolve a conflict that arose from a computer system installation, Plaintiff Cunard (P) sought to sue Defendant Abney, dba Coopers (D). P filed relying on the court’s diversity jurisdiction. P was a British corporation. D, in response, challenged on jurisdictional grounds because, as it alleged, the partners to D were alien and the D corporation was alien with respect to the court altogether. Thereby, D made a motion to dismiss.

The business judgment rule originated in 1945 in Otis & Co. v. Pennsylvania R. Co [2], the corporate directors were sued because they only dealing with one investment house and not “shop around ” for the best possible price available in the sale of securities. The federal district court held that the directors chose the wrong course of action in good faith, therefore “do not subject to liability for negligence in the discharge of their appointed

Upon fulfillment of the four criteria, namely that the defendant has been unjustly enriched at the claimant’s expense and there are no defences available for the defendant, a claimant will qualify for restitution of unjust enrichment as established in Banque Financiere de la Cite v Parc (Battersea) Ltd. Change of position is one of the numerous defences which may be used when it would be excessive to allow a restitution claim at the defendant’s expense. This essay will evaluate the defence of change of position and reinforce the stance that it is adequately effective in protecting a defendant from hardship.

Unlike partnership, a company is distinct from the members and is capable of enjoying rights and duties in its own capacity, which is not the same as those of its members. As Lord Macnaughten in Solomon v Solomon & Co Ltd case quotes “the company is at law a different person altogether from the subscribers and the company in law is not the agent of the subscriber or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in manner provided by the

In Li CJ’s judgment in A Solicitor v Law Society of Hong Kong [2008] 2 HKC 1, he commented in paragraph 9 that the “rigid and inflexible adherence by this Court to the previous precedents may unduly inhibit the proper development of the law and may cause injustice in individual cases. The great strength of the common law lies in its capacity to develop to meet the changing needs and circumstances of the society in which it functions.” In this essay, this statement would be discussed with reference to the role of the courts and their relationship to the legislature.

The basic principal relating to the administration of the affairs of a company is that “the will of the majority is supreme”. The general rule is that the decisions of the majority shareholders in a company bind the minority. 1 In a world that recognizes ‘simple majority rules’, minority shareholders of companies are by default vulnerable to oppression,

Foss v Harbottle case was a foundation of development of derivative action that enables a minority shareholder to bring a legal action in order to recover from a wrong done to the company. Two principles, so-called Foss v Harbottle rule, were made to corporate law in related to a minority shareholder’s right. The first principle was the internal management rule preventing floodgates open to multitude actions by individual shareholders dissatisfied with operation of a company. Under the internal management rule, complaining on internal management by minority shareholders was taken by a board of directors. A decision for the complaint was also decided by the majority rule. The second principle was the proper