A Comprehensive Guide to Rules and Regulations Governing Corporations in the United Kingdom

In another case, Ultraframe (UK) Ltd v Fielding and ors and Progress Property Company Ltd v Moorgath Group Ltd [2010] it was held that in order to assess that the conduct should be ratified, if it does not amount to ultra vires of the company as whole.

As per section 238 of the Companies Act, 2006, A special resolution may be passed by the members of the company if any legitimate reason is found as such. It would need total 75% of majority of vote in order to pass the bill.

The resolution of amending the Article of Association may pass because there are only two members opposing the amendment in articles. The matter of in issue here is, conflict of interest which is said to be attained by Martin. Where Blaise and Sonia are against Martin and other directors, Frary Mew Construction agreed with Martin’s conduct where they learned that there was no personal interest rather, it caused a relief into taking overburden into the company.

Duty of a director to avoid conflict of interests is stated ins section 175 of Companies Act, 2006, which states that a director must avoid such situation that might bring up conflict or conflicts in the interest of the company or its integrity.

In, Regal (Hasting) v Gulliver , the court held that even if a director works in a bonafide manner, their actions led to conflict of interest of the company and a huge loss as whole. In another case, Bhullar v Bhullar , the court stated that a director holding a fiduciary authority cannot exercise such authority or power in order to plant his own interest.

Section 170-180 underlies the duties and responsibilities of a director which needs to be followed by him under any circumstances. His payment at the loss of the company has to be

approved by the rest of the members and shareholders at first according to companies Act, 2006.

Section 260 of the Companies Act, 2006states the definition of derivative claims of England and Wales whereas section 261 lays down the rules for Scotland. A statutory derived action is a corporate action taken by the shareholders of a company in order to protect the company from suffering any wrong caused by breach of duty by the directors. This rule of exception of derivative claim is derived from the case Foss v Harbottle (1843) 67 ER 189, (1843) 2 Hare 461 also known as exceptions to the rule in Foss v. Harbottle. This right applies only on a corporate member who is aggrieved of infringement of his corporate right.

It was also held in Langley Ward Ltd v Trevor & Anor [2011] that it is in the discretion of the court to decide whether it will take up the case of derivative action or not. Exceptions to the derivative claim action is present and it states that if a company is void and is ultra vires then the action cannot be claimed by a company’s shareholders.

In, Nurcombe v. Nurcombe 1985, a wife came to be aware of the misdeeds of her husband who happened to be making money and keeping profits to himself and was one of the directors of the company and claimed derivative action. But it was held that she was not a proper plaintiff in order to claim such an action