ACCA LW · Chapter 10 · Question 13 of 13
A minority shareholder alleges that the directors have breached their duties to the company by selling company assets to themselves at an undervalue. Under Part 11 Companies Act 2006, what claim may the shareholder bring, and on whose behalf?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A derivative claim on behalf of the company, with the permission of the court
Explanation
Under the rule in Foss v Harbottle the proper claimant for a wrong done to the company is the company itself. Part 11 (s260 onwards) allows a member to bring a derivative claim on the company's behalf for negligence, default, breach of duty or breach of trust by a director, but the member must obtain the court's permission to continue it. Any remedy belongs to the company. Separately, a member may petition under s994 for unfairly prejudicial conduct.
More Directors, company secretary and meetings MCQs
- Q2The articles of a small company provide that on a resolution to remove a director, that director's shares carry three votes each…
- Q3Which statutory general duty of directors requires a director to act in the way they consider, in good faith, would be most likely to…
- Q4Directors allotted shares to a friendly company in order to destroy an existing majority shareholder's ability to block a takeover bid…
- Q5How is the standard of care, skill and diligence required of a director under s174 Companies Act 2006 measured?
- Q6A managing director was approached personally by a potential client who said it would not deal with his company. He resigned, claiming ill…