In the case of Foss v Harbottle, there was a conflict between the minority shareholders (Plaintiff) and

the majority shareholders (Defendant). The Plaintiff contended that the Defendant had passed a
resolution that is not in the best interest of the company. Plaintiff claimed that the Defendant had sold
away the company's property in a rather low price or below the market price.

The issues were whether the Plaintiff has the locus standi against the majority, whether the resolution
passed was valid, whether the Plaintiff has the right to initiate the action and whether the court can
interfere the internal management of a company?

From the case, the majority rule was established which has two parts: the proper plaintiff rule and
internal management rule. Under the proper plaintiff rule, if a wrong is alleged against the company,
then the proper plaintiff to sue is the company itself but not the individual shareholders. Under the
internal management rule, if company officers have committed an irregularity and this irregularity can
be ratified in general meeting, then no individual member may sue in respect of irregularity.

Thus, based on this rule, the court held that the P has no locus standi against the majority, the
resolution was valid, Plaintiff has no right to initiate the action and the court cannot interfere the
internal management of the company.

Nurul Afiqah binti Abdul Ghani Ganesan 1142701541

Lean Jie 1142700857

Cheong Ye Kai 1142700611

Chai Shi Hong 1142700609

Chia Wai Chee 1141124039