Paper:
Governing Statute: The Companies Act, 2013 (as amended)
Sections Covered: Ss. 2(20), 2(62), 2(68)–(71), 2(85), 2(87), 2(45), 2(42), 2(46), 2(92), 2(69), 2(70), 3–5, 9–16, 25–26, 31–32, 43–44, 153–159, 241–245 | Prospectus, Directors' Duties, Oppression & Mismanagement
Introduction: Company Law is the backbone of corporate jurisprudence in India. The Companies Act, 2013 modernised the older 1956 Act, introducing landmark reforms in corporate governance, investor protection, NCLT adjudication, CSR mandates, and class action suits. This course covers the foundational doctrine of separate legal entity (Salomon), lifting of corporate veil, promotion and formation, constitutional documents (MoA & AoA), ultra vires, indoor management (Turquand), capital market instruments (prospectus, shares, debentures), directors' fiduciary duties, general meetings, and prevention of oppression and mismanagement including the Foss v. Harbottle rule.
Company law in India evolved through several stages:
Upon incorporation, a company becomes a distinct legal person — separate from its members, directors, and promoters. This foundational principle was cemented in Salomon v. Salomon.
Facts: Aron Salomon had carried on business as a boot manufacturer for 30 years. He incorporated Salomon & Co. Ltd. with himself, his wife, and five children as the seven members (each holding one share). He sold his business to the company for £39,000, receiving £20,000 in debentures (secured creditor) and the rest in shares. The company failed. Unsecured creditors claimed Salomon was the real owner and must be personally liable; the company was his agent or trustee.
Issue: Is a company a separate legal person from its members — even if one person controls it and holds most shares?
Held (unanimously by House of Lords): The company was a separate legal entity. It was not Salomon's agent. The debentures made Salomon a secured creditor with priority over unsecured creditors. The company's debts were not Salomon's personal debts. The legislature had permitted one-man companies (subject to the formalities); courts should not override Parliament's choice.
Principle: A duly incorporated company is a separate legal entity from its members; it can be a creditor of, or debtor to, its own controlling member; the fact that one person owns most shares does not make the company that person's agent or alter ego.
Facts: Lee was the sole governing director and almost sole shareholder of Lee's Air Farming Ltd. He employed himself as the company's chief pilot at a salary. He was killed in a crash while flying for the company. His widow claimed workmen's compensation. The company's insurer argued Lee could not be both employer and employee of the same company.
Held: Lee and the company were distinct legal persons. The company (as a separate entity) could employ Lee as chief pilot. Widow's claim for compensation succeeded.
Principle: The doctrine of separate legal entity allows a controlling shareholder/director to simultaneously occupy multiple roles vis-à-vis the company — including as its employee, thus entitled to compensation as such.
Facts: A newspaper company challenged Government regulations restricting newspaper page count as violating Article 19(1)(a) (freedom of speech). The Government argued a company cannot hold fundamental rights.
Held: A company can invoke Article 19 rights through its shareholders who are citizens. Freedom of speech of the press includes the right to determine the volume and content of publication. The regulations were struck down.
Principle: A company (though not a citizen) can exercise certain fundamental rights through its citizen-shareholders; newspaper companies can invoke Article 19(1)(a) freedom of speech and expression.
Facts: During World War I, Continental Tyre was an English-registered company, but all its shareholders and directors except one were German nationals (enemy aliens). Daimler owed money to Continental Tyre and refused to pay, arguing it would be trading with the enemy.
Held: Courts can look behind the corporate veil to determine the nationality/character of those who control a company where national interest demands it. Continental Tyre's controlling shareholders were enemy aliens — the company took their character. Daimler need not pay during wartime.
Principle: In exceptional circumstances (wartime, national security), courts may pierce the corporate veil to determine the character of those controlling the company; a company may be treated as an enemy alien if its controllers are enemies.
While separate legal personality is the rule, courts and statute lift the veil in defined circumstances to hold those behind the company responsible.
Facts: Horne, a former employee bound by a non-solicitation covenant, formed a company (J.M. Horne & Co. Ltd.) and used it to solicit Gilford's customers. The company itself had not signed the covenant.
Held: The company was a mere sham — formed solely to evade the covenant. Injunction granted against both Horne and his company. The corporate veil was lifted.
Principle: A company formed as a mere sham/cloak to evade a legal obligation will be treated as the alter ego of the person who formed it; courts will lift the veil and grant relief against both the individual and the company.
Facts: Associated Rubber transferred assets to a subsidiary to reduce its profits, thereby reducing the bonus payable to workmen under the Bonus Act. The workmen sought inclusion of the subsidiary's profits in calculating bonus.
Held: The veil was lifted. The subsidiary was created solely to defeat the workmen's legitimate bonus claim. The assets and profits of the subsidiary were treated as part of the parent's assets for Bonus Act purposes.
Principle: Courts will lift the corporate veil where a subsidiary is created with the sole purpose of evading a statutory obligation of the parent company — the parent and subsidiary will be treated as one entity for that purpose.
Facts: Dinshaw created four private companies and transferred investments to them. He received income as dividends at a lower tax rate, avoiding super-tax. The IT authorities sought to tax him on the income as if it were his personal income.
Held: The companies had no independent existence — formed solely to avoid super-tax. The veil was lifted and income attributed to Dinshaw personally.
Principle: The corporate veil may be lifted to prevent tax evasion where companies are formed purely as vehicles for avoiding personal tax liability with no genuine independent business purpose.
Facts: When a company was nationalised, a dispute arose whether the property of its subsidiary was also nationalised. The subsidiary was a separate legal entity.
Held: Nationalisation of the parent does not automatically nationalise the subsidiary. A wholly-owned subsidiary remains a distinct legal entity. The veil was not lifted merely because of majority ownership by the parent.
Principle: The fact that a company is a wholly-owned subsidiary does not by itself justify piercing the veil; subsidiaries remain distinct legal entities with their own rights and liabilities.
| Type | Section | Key Feature |
|---|---|---|
| Public Company | 2(71) | Can invite public to subscribe; no restriction on transfer; min. 7 members; listed or unlisted |
| Private Company | 2(68) | Max 200 members; restricts share transfer; cannot invite public; 2+ members |
| One Person Company (OPC) | 2(62) | Only 1 member; nominee required; limited exemptions |
| Small Company | 2(85) | Paid-up capital ≤ Rs.4 cr OR turnover ≤ Rs.40 cr; fewer compliance requirements |
| Holding Company | 2(46) | Controls another company (subsidiary) |
| Subsidiary Company | 2(87) | Controlled by a holding company through majority shares or board control |
| Government Company | 2(45) | ≥51% paid-up share capital held by Central/State Government |
| Foreign Company | 2(42) | Incorporated outside India; has place of business in India |
| Company Limited by Shares | 2(22) | Liability of members limited to amount unpaid on shares |
| Company Limited by Guarantee | 2(21) | Liability limited to amount members undertake to contribute on winding up |
| Unlimited Company | 2(92) | No limit on members' liability |
| Basis | Public Company | Private Company |
|---|---|---|
| Minimum Members | 7 | 2 (1 for OPC) |
| Maximum Members | No limit | 200 |
| Share Transfer | Freely transferable | Restricted by AoA |
| Public Subscription | Permitted | Prohibited |
| Listing on Stock Exchange | Can be listed | Cannot be listed |
| Prospectus | Required for public issue | Not required |
| Directors — Minimum | 3 | 2 (1 for OPC) |
| AGM | Mandatory | Can be exempted by exemption notification |
A promoter occupies a fiduciary position — not an agent or trustee in strict sense, but a person in a position of trust vis-à-vis the company he is forming. Key obligations:
Facts: Erlanger (promoter) bought a phosphate island for £55,000. He then sold it to the company he promoted for £110,000 — pocketing a secret profit of £55,000. The board who approved this purchase was composed entirely of Erlanger's nominees. The company sued to rescind.
Held: The promoter must disclose all profits to an independent board or shareholders. Disclosure to a nominee board controlled by the promoter is no disclosure at all. The company was entitled to rescind and recover the secret profit.
Principle: A promoter's fiduciary duty requires full disclosure of all profits to an independent board or shareholders; disclosure only to the promoter's own nominees is not sufficient; the company may rescind and recover secret profits.
The MoA is the company's charter — the document that defines its relationship with the outside world and sets the outer limits of its powers. The company cannot go beyond the MoA.
An act is "ultra vires" (beyond powers) if it falls outside the objects stated in the MoA. Historically, ultra vires acts were void and could not be ratified even by unanimous consent of shareholders.
Facts: Ashbury's objects permitted making railway carriages — not constructing railways. Despite this, Ashbury contracted with Riche to build a railway in Belgium. When Ashbury repudiated the contract, Riche sued.
Held: The contract was ultra vires and void ab initio. The objects clause limits the company's capacity. Even unanimous shareholder ratification cannot validate an ultra vires act. Riche could not enforce the contract.
Principle: An ultra vires act is void from the beginning and incapable of ratification — even by unanimous consent of all shareholders; it is outside the company's legal capacity as defined by the Memorandum.
Facts: A company's objects clause contained numerous objects each stated as independent objects, with a sub-clause making each an independent main object (not merely ancillary). The company's lender relied on this wide objects clause.
Held: The "independent objects" sub-clause was valid. Each object could be treated as an independent main object. This significantly broadened the company's capacity and reduced the risk of ultra vires.
Principle: A company may draft its objects clause widely, with an "independent objects" sub-clause; courts give effect to each stated object as a main object rather than treating them as merely ancillary — this largely nullifies the ultra vires doctrine in practice.
Facts: The company's objects permitted making costumes. Instead, it carried on a different business — building a factory. A creditor supplied materials for the factory.
Held: The supply contract was ultra vires. The creditor was fixed with constructive notice of the company's limited objects. He could not recover.
Principle: Third parties are deemed to have constructive notice of a company's Memorandum (its public document); they cannot enforce ultra vires contracts — they are presumed to know the company's limited objects.
Facts: An "independent judgment" sub-clause in the objects permitted the company to carry on any business the directors believed could be advantageously carried on in connection with its main business. Bell Houses acted as commission agent. City Wall refused to pay and claimed the activity was ultra vires.
Held: The directors' bona fide judgment sub-clause was valid. If directors bona fide believed the activity was advantageously connected to the main business, it was intra vires. The contract was enforceable.
Principle: An "objects by directors' opinion" sub-clause is valid; activity done bona fide within the directors' judgment of what is connected to the company's business is intra vires.
While outsiders are fixed with constructive notice of the MoA and AoA (public documents), they are NOT required to ensure that all internal formalities (resolutions, authorisations) were actually followed. This is the Rule in Turquand's Case:
"Persons dealing in good faith with a company are entitled to assume that acts within the constitution have been regularly performed, even if they have not verified the internal proceedings."
Facts: The company's AoA authorised borrowing money as authorised by a general resolution. The directors issued a bond to the bank without any resolution having actually been passed. When the company defaulted, it denied the bond was valid.
Held: The bank was entitled to assume the resolution had been passed (it was a mere internal requirement). The company was bound by the bond. Outsiders need not ensure that internal requirements have been met.
Principle: Persons dealing in good faith with a company may assume that all internal proceedings have been regularly conducted; they need not inquire into internal formalities — only the external constitution (MoA/AoA) which is publicly available binds them.
Facts: The company's AoA required a deed to be signed by the MD, secretary, and working director. A mortgage deed was signed by only the secretary and working director (MD's signature was absent). The plaintiff relied on the deed.
Held: Turquand's rule did not apply. The requirement of three signatures was in the publicly available AoA — not a mere internal resolution. The plaintiff was fixed with constructive notice and should have checked the AoA. The deed was not binding.
Principle: The indoor management rule protects outsiders from internal procedural irregularities not visible from public documents; if the irregularity is apparent from the MoA/AoA itself (a public document), there is no protection — the outsider is presumed to know.
Facts: Kapoor, a director, acted as managing director (employing architects, making contracts) without being formally appointed as such. The board knew of and permitted his acts but never formally resolved to appoint him MD. The company refused to pay the architects.
Held: The company was bound. The board's conduct in permitting Kapoor to act as MD constituted a representation to outsiders that he had authority. "Ostensible authority" or "apparent authority" was sufficient to bind the company.
Principle: A company is bound by acts done within the ostensible (apparent) authority created by its conduct — even without formal appointment; the principal is estopped from denying the agent's authority when it has represented that the agent has such authority.
The Memorandum and Articles of Association are public documents registered with the Registrar. Any person dealing with the company is deemed to have constructive notice of their contents. This means:
| Basis | Share | Debenture |
|---|---|---|
| Nature | Ownership interest in the company | Debt instrument — loan to company |
| Holder | Shareholder — owner | Debenture holder — creditor |
| Return | Dividend (out of profits only) | Interest (fixed; payable regardless of profit) |
| Priority in Winding Up | Last to be paid (after all creditors) | Creditor — paid before shareholders |
| Voting Rights | Equity shareholders have voting rights | Generally no voting rights |
| Security | No security for shareholder | Usually secured by charge on assets |
| Capital Gain Risk | Shareholder bears risk of loss | Debenture holder has fixed claim |
Facts: Shareholders of Percival's company wished to sell their shares and approached the company's directors. The directors bought the shares at the market price, knowing (but not disclosing) that negotiations were underway for a takeover at a much higher price. Shareholders sought to set aside the sale.
Held: Directors are not trustees for individual shareholders; their fiduciary duty runs to the company as a whole, not to individual shareholders in buying or selling transactions. Directors need not disclose confidential information about pending negotiations to a shareholder selling his shares.
Principle: Directors' fiduciary duties are owed to the company — not to individual shareholders; in a transaction between a director and an individual shareholder, there is no duty to disclose confidential company information (though insider trading laws now change this analysis).
Facts: The company suffered massive losses due to the fraud of its managing director and the negligence of the other directors who failed to supervise him. The liquidator sued the directors for negligence.
Held: The standard of care expected of directors is: (1) subjective — a director need only display the care and diligence which can reasonably be expected from a person of his knowledge and experience; (2) a director need not give continuous attention; (3) a director may delegate and trust officials unless suspicious circumstances arise. The non-executive directors were not held liable for the managing director's fraud in the absence of suspicious circumstances.
Principle: (Under the old standard) A director's duty of care is subjective — measured by the knowledge and experience of that particular director; directors need not give continuous attention and may trust officers. (Note: Modern law imposes an objective standard of the reasonably diligent person under Companies Act, 2013)
Facts: Regal Hastings wanted to buy two cinemas. They incorporated a subsidiary company. When the subsidiary needed more capital, the directors subscribed shares in their own names (Regal could not afford more). The subsidiary and the cinemas were later sold. The directors made a profit on their shares. Regal's new owners sued the directors to recover the profit.
Held: The directors were liable to account for the profit. They had made the profit by virtue of their position as directors of Regal — using information and opportunity that came to them in their fiduciary capacity. The fact that Regal could not have made the profit itself did not excuse them. No question of good faith arises — the duty is strict.
Principle: A director who makes a profit by virtue of his position or from opportunities that came to him in his fiduciary capacity must account for that profit to the company — regardless of good faith or whether the company could itself have made the profit.
Facts: Cooley was the managing director of IDC. He learned (while MD) that the Eastern Gas Board wanted to award a lucrative contract — but not to IDC. Cooley obtained his release from IDC on false pretences (claiming ill health) and then obtained the contract personally.
Held: Cooley was liable to account for the profits from the contract. He had obtained the information about the contract in his capacity as MD. Even though the company itself could not have got the contract (the Gas Board had refused IDC), Cooley was still obliged to account for the opportunity he diverted from the company.
Principle: A director who diverts a corporate opportunity (even one the company could not directly exploit) for personal benefit in breach of his fiduciary duty must account for all profits — the "no possible benefit to company" argument is no defence.
Facts: Shareholders alleged that the company's directors were making decisions in the directors' personal interests rather than the company's interests. The issue arose whether a court could interfere with discretionary acts of directors made in good faith.
Held: Courts will not interfere with the internal management of companies acting within their powers — the proper forum for challenging directors' decisions is the general meeting, not the courts. Courts only intervene in cases of breach of fiduciary duty, fraud, or ultra vires acts.
Principle: The "business judgment rule" — courts will not second-guess bona fide discretionary decisions of directors made within their powers; judicial review is limited to fraud, breach of fiduciary duty, and ultra vires acts.
Facts: The majority shareholders of Kalinga Tubes used their control to reduce the petitioner (minority shareholder) from being a director, to deny him access to company records, and to conduct the affairs in a manner that systematically excluded him from the management he had a right to participate in.
Held: This constituted oppression. The conduct must be burdensome, harsh, and wrongful. It must involve a lack of probity and fair dealing. Mere disapproval of management decisions is not oppression — but systematic exclusion and unfair treatment qualifies. Relief granted.
Principle: "Oppression" requires conduct that is burdensome, harsh, and wrongful — involving lack of probity and fair dealing; it is more than mere commercial unfairness — there must be an element of unfair abuse of majority power against the minority.
Facts: After the removal of Cyrus Mistry as Executive Chairman of Tata Sons Ltd. in October 2016, the Mistry family (through Cyrus Investments) challenged the removal as oppressive and mismanagement under Sections 241–244. NCLT dismissed the petition; NCLAT reversed and restored Cyrus Mistry; Supreme Court heard Tata's appeal.
Issue: Whether Cyrus Mistry's removal was oppressive; whether the Tata Sons' Articles (particularly Article 75 allowing removal of any director by the Board) were valid.
Held (Supreme Court, 2021): NCLAT's restoration of Cyrus Mistry as Executive Chairman was set aside. The removal was within the Board's and shareholders' legitimate powers. There was no oppression — the removal was a valid exercise of corporate governance rights. Article 75 was valid. However, the Court noted that Tata Sons' status as a "public company" was a separate issue warranting examination.
Principle: Removal of a director by a Board or shareholders acting within their legitimate constitutional powers does not constitute "oppression" under Section 241 — oppression requires conduct that goes beyond the proper exercise of corporate governance rights and amounts to an abuse of the majority's power against the minority.
Facts: Family company — petitioner (minority) alleged that the majority shareholders/directors excluded him from management, failed to hold meetings, denied him access to accounts, and misapplied company funds.
Held: Conduct of majority shareholders that systematically excluded minority from their rightful role in management, combined with financial irregularities and failure to hold statutory meetings, constituted oppression. Relief granted — including purchase of minority shares by majority at a fair value.
Principle: In a quasi-partnership company (family company where members expected mutual participation in management), exclusion from management combined with financial irregularities constitutes oppression warranting NCLT relief.
Facts: Two shareholders of the Victoria Park Company sued the directors for fraudulent misapplication of company property. The company itself did not bring the suit.
Held: The court dismissed the suit. Two principles emerge:
Principle: The company is the proper plaintiff for wrongs done to it (not individual shareholders); courts will not interfere with the internal management of a company at the instance of a minority if the majority can ratify the act complained of.
Minority shareholders can bring a derivative action (on behalf of the company) in the following circumstances:
Facts: A minority shareholder sought to challenge acts of the majority which were claimed to be oppressive. The question was whether a minority shareholder could maintain an action for acts which were within the majority's power but oppressive to the minority.
Held: Courts are reluctant to interfere with the internal management of companies. However, where the acts are oppressive (not merely unfair or unwise), the court can intervene. The distinction is between mere commercial unfairness (no remedy) and a lack of probity/unfair abuse of power (remedy available).
Principle: Mere commercial unfairness or business disagreement between majority and minority does not attract court intervention; oppression requires something more — an element of lack of probity, unfair abuse of majority power, or wrongful conduct toward the minority.
Facts: The company's directors were themselves the majority shareholders committing fraud. The minority alleged the directors had misappropriated company funds. The majority prevented the company from taking action against the directors.
Held: Where the wrongdoers control the company and use that control to prevent the company from suing them, individual minority shareholders can bring a derivative action on behalf of the company. This is the "fraud on the minority" exception to the Foss v. Harbottle rule.
Principle: The "fraud on the minority" exception applies when: (1) the majority shareholders commit fraud on the company; (2) they are in control and prevent the company from suing; — then minority shareholders can bring a derivative action on behalf of the company.
Class action suits allow a defined group of similarly situated members or depositors to sue collectively — instead of each filing separate suits. This is especially relevant for large companies with many dispersed shareholders.
↑ Back to TopWinding up is the process of dissolving a company — realising its assets, paying debts, and distributing surplus to shareholders. Under the Companies Act, 2013:
| Term | Section | Definition |
|---|---|---|
| Company | 2(20) | Body corporate incorporated under Companies Act or previous company law |
| Private Company | 2(68) | Max 200 members; restricts share transfer; prohibits public subscription |
| Public Company | 2(71) | Not a private company; can invite public; freely transferable shares |
| OPC | 2(62) | Company with only one member |
| Small Company | 2(85) | Paid-up capital ≤ Rs.4 cr OR turnover ≤ Rs.40 cr |
| Government Company | 2(45) | ≥51% paid-up capital held by Central/State Government |
| Foreign Company | 2(42) | Incorporated outside India; place of business in India |
| Promoter | 2(69) | Named in prospectus; controls affairs; board acts on his advice |
| Prospectus | 2(70) | Any document inviting public offers to subscribe to securities |
| Independent Director | 2(47) | Not a promoter/relative; no material pecuniary relationship; independent judgment |
| Share | 2(84) | Share in share capital of company; includes stock |
| Effect of Incorporation | 9 | Body corporate with perpetual succession, power to contract, sue and be sued from date of incorporation |
| Memorandum | 4 | Charter of company; defines external relations; must contain 6 clauses |
| Articles | 5 | Internal regulations of company |
| Binding Effect | 10 | MoA and AoA bind company and members as if signed covenants |
| Directors' Duties | 166 | Good faith; best interests of company; due care and skill; no conflict of interest; no improper benefit |
| Oppression | 241 | Affairs conducted in manner oppressive to members or prejudicial to public interest |
| Class Action | 245 | Members/depositors may file collective suits against company, directors, auditors, experts |
| Case | Principle |
|---|---|
| Salomon v. Salomon (1897) | Company = separate legal entity; even one-person-controlled company is distinct from its owner |
| Lee v. Lee (1960) | Controlling shareholder can be employee of his own company — separate entity allows multiple roles |
| Bennett Coleman v. UOI (1972) | Company can invoke Article 19(1)(a) through its citizen-shareholders |
| Daimler v. Continental Tyre (1916) | Courts may pierce veil to determine nationality/character of controllers in wartime |
| Gilford Motor v. Horne (1933) | Veil lifted where company formed as sham to evade legal obligation |
| Workmen v. Associated Rubber (1985) | Veil lifted where subsidiary created to evade statutory obligations of parent |
| In re Dinshaw Petit (1927) | Veil lifted for tax evasion devices with no genuine business purpose |
| Subhra Mukherjee v. Bharat Coking Coal (2000) | Mere majority ownership does not justify piercing veil — subsidiaries remain distinct entities |
| Erlanger v. New Sombrero Phosphate (1878) | Promoter must disclose all profits to independent board/shareholders; secret profits = company may rescind |
| Ashbury Railway Carriage v. Riche (1875) | Ultra vires acts = void ab initio; incapable of ratification even by unanimous shareholders |
| Cotman v. Brougham (1918) | "Independent objects" sub-clause valid; each object = main object; ultra vires doctrine effectively neutered in practice |
| In re Jon Beauforte (1953) | Third parties fixed with constructive notice of MoA; cannot enforce ultra vires contracts |
| Bell Houses v. City Wall (1966) | "Directors' opinion" sub-clause valid; bona fide directors' decision = intra vires |
| Turquand (1856) | Outsiders dealing in good faith may assume internal formalities complied with (Indoor Management Rule) |
| Kotla Venkataswamy (1934) | Turquand's Rule does not protect where irregularity visible from publicly available AoA itself |
| Freeman & Lockyer (1964) | Company bound by acts within agent's ostensible (apparent) authority created by company's conduct |
| Percival v. Wright (1902) | Directors' duties run to company as a whole — not to individual shareholders |
| City Equitable Fire Insurance (1925) | Old subjective standard of care for directors; directors may delegate and trust officers |
| Regal Hastings v. Gulliver (1967) | Directors must account for profits made from corporate opportunity — even if company could not have made the profit |
| Industrial Dev Consultants v. Cooley (1972) | Director who diverts corporate opportunity must account for all profits — "company couldn't have got it" is no defence |
| Foss v. Harbottle (1843) | Company = proper plaintiff; majority rule — courts won't interfere if majority can ratify the act |
| Shanti Prasad Jain v. Kalinga Tubes (1965) | Oppression = burdensome, harsh, wrongful + lack of probity; systematic exclusion of minority qualifies |
| TCS v. Cyrus Investments (2021) | Valid exercise of corporate governance rights (removal of director) ≠ oppression; oppression requires abuse of majority power |
| Bharat Insurance v. Kanhaiya Lal (1935) | "Fraud on minority" exception — if wrongdoers control company and prevent suit, minority may bring derivative action |
Sham/fraud Unlawful evasion Liability evasion (statutory) Known enemy character + Tax avoidance, Alter ego
Fraud on minority Wrongdoers in control Majority required (special) Special member rights + Ultra vires