A company naturally has dual nature if integrated under a Companies Act. The first role is to become an association for company members, or the dual is to become a separate individual from all company members. Section 122 of the 2006 Companies act defines a company member as anyone who can subscribe to the memorandum of a company can become its member. A company is considered a legal person that is different from its shareholders. If something is wrong with a company, it doesn’t mean it is wrong for its shareholders. Further, the shareholders are not responsible for anything wrong with the company. This blog will help you learn the pros and cons of a dual company role; you may also avail law coursework writing services to get more knowledge about the topic.
In a particular company, a shareholder has rights depending on the article of association and memorandum of the company. A shareholder investing in a business company in return gets a lot of rights that chording to shares type that acquired. However, most of the companies have ordinary shares. But in the United Kingdom, the law allowed to creation of other classes of shares. The shareholders are exercisable general powers provided by the 1986 Insolvency Act or Companies Act 2006.
Issues of company law
Most companies’ issue arises when there is indifference in the treatment of majority and minority shareholders. The problems will arise when the majority shareholders want to achieve their objective. He outvoted the minority shareholders, or when these are the company directors who have the right to make decisions and pass resolutions.
Other problems arise when the minority shareholders disagree with the decision of the majority shareholders. The anxiety comes in this company law when there is a strike to maintain a balance among majority and minority shareholders. The minority shareholders have a weak position in the company compared to the majority shareholders. For more Detail https://techlearningupdates.com/
What about derivative action?
a lawsuit that is filed by minority shareholders when a wrong is committed against the corporation.In UK companies, shareholders can take action against directors as minority shareholders. It is called derivative action because this right used by shareholders is not their person but the company giving them. The company did not become successful in this exercise. The purpose of this action is the company’s protection. A company’s management can take action in the company’s place to protect it.
The minority shareholders that are using this action are getting financial problems. If this action is successful, it recovers the company’s issues, but they can face potential guilt for their defendants and legal costs if it is unsuccessful.
What about unfair prejudice?
The minority shareholders are using a second enforcement strategy, unfair prejudice. This statutory remedy is used to quantify shareholders’ actions to enforce infringement of directors’ duties. It is a very flexible term. The categories involved in this term are management exclusion, authentic duties of infringement directors or mismanagement. It is impossible to know about the cost level incurred in this term of unfair prejudice because it is time-consuming and expensive.
However, if the rights of company shareholders are diminished, they can claim that under a principle. A principle that is equitable or just winding up.
Equitable and just winding up
Suppose the company members and shareholders are not satisfied with how this company is running. Then a drastic way to deal with this situation is to end the company’s existence. It is a severe action that can stop the work of a successful company. And the court will take this action only in exceptional conditions. If company members want to use this winding-up resolution, then a resolution is passed. According to this resolution, if most members agree to this wound, they will take action if one person appeals to the court.
What about a class action lawsuit
Shareholders also can use a class action lawsuit against a company’s rights that are infringed. It is a type of action in which collective members claim to court. This action aims to bring together the member’s claims generally. This action aims to achieve the economics of effort, time, or expense.
Advantages of class action lawsuit
If shareholders bring this action against any company, they may have advantages. The first advantage is that it allows people to claim accumulation in a single litigation. The result of this advantage is to increase the ability of the legal process or lower the cost of a lawsuit. It allows in the cases of fact and law with common questions. Through this action, with an accumulation of claims, finish the necessity of a trial of the same exhibit or witnesses. For these cases, usually, there are limited funds. In this way, this action makes sure that all defendants are receiving the same funds. In these situations, some defendants may compensate. If they win this case, the court will centralize the claims in one place; in this way, the assets will divide equally among all defendants.
Disadvantages of class action lawsuit
There are also some disadvantages that shareholders can face. The first disadvantage to starting this action for shareholders is cost issues. The member of the affected class can make necessary lawsuit decisions. The other disadvantage is that the cases are resolved for financial repayment, coupons for rebates or future services. The problem comes when the defendant is looking for another repayment. If the defendants or representatives do not have solid arguments, it will hurt the legal claim of the class member. If they become unsuccessful, the people class member does not have the right to bring a lawsuit against the individual later.
So it is very difficult for shareholders to decide whether they should take part or not in a class action lawsuit. By looking at the above mention benefits and disadvantages of the class action, the class member can decide how they should do it. It will give them a realistic or possible idea that will provide them with better outcomes. They should also need help from law coursework writing services to understand law actions better if they are learning law subjects. Once they understand it correctly, they will take decisions easily. The company’s dual role is not as easy for all company members.