As a general rule, where irregularity has been committed in the course of the management of the affairs of the company or a wrong has been done to the company, it is only the company that can ratify the irregular conduct or sue to remedy the wrong (section  299; Foss versus   Harbottle (1843) 2 Hare 461; 67 E.R. 189; Abubakari versus   Smith (1973) 6 S.C.31;-Where S.C held that based on the rule in Foss v. Harbottle, the action must fail as the claimant sued in a personal capacity and did not join the association, as it was the association that should have been sued and not individuals  Yalaju - Amaye versus   Associated Registered Engineering Contractors Ltd. [1990] 4 NWLR (Part 145) 422; Edokpolor and  Co. Ltd. versus   Sem-Edo Wire Industries Ltd. (1984) 15 NSCC 553.

Shell petroleum v. Nwawka: N was an employee of shell, and at a point, the most senior Nig employee in shell. A position became vacant which he thought he could have filled. However a young member of staff from the Netherlands (or Germany) was brought to fill that position. Mr. N was bitter n spoke ill of shell and as a result was rendered redundant and paid compensation in lieu of notice. N was confused and even went to National Assembly to report shell, and the National assembly wrote to shell to appear and shell ignored the N/A, so N went to court. One of his reliefs was that the court should make a declaration that shell was engaged in dubious expatriate quota manipulations and had no right to make him redundant. Shell, in response, brought a preliminary report to his action, that he had no locus standi to sue. N, in turn, stated that he had a locus to sue, using Foss v. Harbottle, that he was protecting the interest of fellow Nigerians against multi-nationals. The CA agreed with N (though he did not win because the courts will not impose a willing employee on an unwilling employer, but that the rule applies.) Shell went to S.C and the S.C agreed that the rule applied but in this instance they were going to look into N’s complaint and what it is that shell had done wrong.
However, the minority may be protected now by action by members and outside bodies.
1.                 Members' Direct Action (for injunction and declaration) (Exceptions to the Rule in Foss versus   Harbottle (1843) 2 Hare 461; 67 E.R. 189;
A member may by injunction or a declaration restrain the company from the following:
        (a)      Entering into any transaction which is illegal or ultra vires (section  300(a)). Parke versus   Daily News [1962] All Er 929; [1962] Ch 927; [1962] 3 WLR 566;- Here Majority shareholders wanted to share as asset belonging to the company. After, the sale, they wanted to distribute the proceeds among employees being laid off. The minority shareholder went to court to seek a declaration that the gift to the employees who were to be redundant was an ultra-vires gift, and the coy was so restrained
        (b)      Purporting to do by ordinary resolution any act which its constitution or the Act requires to be done by special resolution (section 300(b)); Edwards versus   Halliwell [1950] 2 All E.R 1064;-Here, a trade union has a cons with a provision by which the contribution by members were fixed by a specified rate. The cons also provided that it could only be increased if 2/3rd majority of the members vote in favour of the increase. A meeting was held, no votes were cast, & the people at the meeting formed a quorum though not 2/3rd. The court held that the proceedings of the meeting were invalid because 2/3rd majority did not vote in favour of the meeting as required by 2/3rd majority of the trade union
NB: Where there is a mere irregularity in the internal procedures of a coy, the exceptions here do not apply
        (c)      Any act or omission affecting the applicant's individual right as a member (section 300 C )); Pender versus   Lushington (1877) Ch. D670.
NB: This exception does not include the fact that an employee complains that dividends have not been declared as there is no rule of law that states that a coy must declare dividends. However, if dividends are declared and they refuse to pay then that becomes an infringement of a personal right that can be taken to court.
(d)        Committing fraud on either the company or the minority shareholders where the directors fail to take appropriate action to redress the wrong done. (section  300(d)).(Most controversial exception and difficult to prove. i.e. one must Prove that:
·       what was taken belonged to the company;
·       it passed to those against whom the claim is made or their protégé
·       Those who appropriated the company's property are in control of the company.
·       That they acted fraudulently
NB: It is not enough to allege a series of facts as one has to prove all the above things to succeed.
 Cook versus   Deeks [1916] A.C.554(P.C. [1916-17] All ER Rep. 285).- Here the Directors who were also majority shareholders negotiated a contract in the name of the coy, and when the got back to the coy, they took the contract for themselves, passed a resolution stating that the coy had no interest in the contract. The court held that the profits derived from that contract belonged in equity to the coy as the coy could not pas a resolution to defraud itself.
               (e)      Where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to minority shareholders (section  300(e)). (Thus this provision allows a minority action where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to minority shareholders;)

(e)        Where the directors are likely to have profited or benefited from their negligence or from their breach of duty (section  300(f). (Thus it is not enough to just say that they were negligent)
see Daniels v Daniels- the coy was controlled by 2 directors who were husband and wife. They bought land for £4000 from the estate of a deceased person. The coy later sold the same asset to the wife in her personal capacity at the same price that they paid for it. She now resold the pty for£120 000. A minority shareholder went to court, and it was held that the circumstances of the case required a lot of investigation.
Where a member institutes a personal action to enforce a right due to him, or institutes a representative action on behalf of himself and other affected members to enforce any rights due to them, he will not be entitled to any damages but only to a declaration or injunction to restrain the company and or directors from doing the particular act (section  301)(I)(2)).
2.                  Derivative Action
Application may be made to court for leave to bring an action in the name or on behalf of the company or to intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company. (sections 303 - 309).
3.       Relief on Grounds of Unfairly Prejudicial and Oppressive Conduct (When all hope is gone as to the other exceptions, one should try to see if they can come under this exception, though this is also very difficult to satisfy)
A member who alleges that the affairs of the company are being conducted in a manner oppressive or unfairly prejudicial to a member or members may apply to court for relief by petition (section  310(1) and section  311)). (see Ijale Properties Ltd. versus   Omololu - Mulele [2000] FWLR (Pt.5) 709). In this case, the allegation was  by minority shareholder, and the minority shareholder stated that since the coy was incorporated, they had not held a single meeting, not filed returns, no auditors or coy sec. the court held that this was a clear case were s.311 could be invoked as a basis of action
       NB  The  same powers under section 311 are conferred on personal representative and also the CAC may petition the court on the grounds
       Under s.312, one can ask for a specific order or a general order(omnibus order) to control how the coy will be run in the future. The court may regulate the company's affairs for the future.
       The court may restrain the doing of or the continuing of prejudicial acts. Or order the doing of a specific thing the court may direct an investigation to be made by CAC that the company be wound up
       reduction of the company's capital;

NB: There are 3 capacities in which an action can be brought:
1.    personal
2.    representative
3.    derivative
 NB: (See also Power-point slide for expanciation of the above actions) An aggrieved minority can bring one action or combine three types of actions i.e. Personal, derivative and representative actions

Note: The member shares this right of action with the following:
        (a)      A director or officer or former director or officer of the company;
        (b)      A creditor; 
        (c)      The Commission;
        (d)      Any other person permitted by the court in its discretion (section  310(1)).
   4.    Investigation of the Company by Commission (SEE expanciation of this in slides)
The Commission may appoint inspectors to investigate the affairs of the company.
        (a)      On the application of members (section  314).
        (b)      On the application of the company
(c) . On the orders of the court (section  315(1) and
        (d)      Of its own motion (section  315(2)).
5.     Winding up on the Just and Equitable Ground (section  408(e)).

NB: note Other Minority Protection

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