Company Law Essay Example | Topics and Well Written Essays - 5000 words

Company Law - Essay Example n be altered by special resolution.3 However, any alteration must comply with the provisions contained in the company’s Memorandum of Association and the current Companies Acts. The Memorandum sets out the objects of the company and what the company can do. Therefore in the event a provision of the Articles is inconsistent with the Memorandum it will be overruled.4 Any alteration of the company’s Article of Association must be conducted in good faith and for the overall benefit of the company.5 The underlying rationale is the extent to which the majoritys power is contained so as to prevent majority oppression of the minority. Put another way, the principles of common law and equity effectively bind the majority share holders in the manifest exercise of their powers at the expense of minority shareholders.6 The courts have consistently approached the question of alteration of a company’s Articles of Association with extreme caution. There are many variants that are potentially conflicting. For one thing a fine balancing of the company’s interests and the interests of the members of the company as a body is relevant. The doctrine of majority rule is as equally important to the court as is the protection of the minority from oppression by the majority. Since by virtue of Section 9 of the Companies Act 1985 a majority can alter or amend provisions contained in the Articles of Association, it is important to the court that this is not accomplished by discriminatory or fraudulent means or motives on the part of the majority. The doctrine of majority rule was introduced in Foss v Harbottle. The rationale behind Foss was that any difficulties within the structure of the company ought to be dealt with by ratification by the majority shareholders.7 Inherent in this principle is the courts’ recognition of the company’s right to alter its Articles of Association. Jenkins LJ said, ‘†¦where the alleged wrong is a transaction which might be made binding