Ratio Decidendi
The proper claimant in an action for a wrong done to a company is the company itself, not individual shareholders (the 'proper plaintiff' rule). Where the alleged wrong is a matter that could be ratified by a simple majority of shareholders, the court will not intervene at the suit of a minority shareholder (the 'majority rule' principle).
Facts
Two shareholders brought an action against five directors of the Victoria Park Company, alleging that the directors had misapplied company property. They sought relief on behalf of themselves and other shareholders.
Judgment Summary
Wigram V-C held that the action could not be maintained by individual shareholders. The wrong was done to the company, and the company was the proper plaintiff. Since the acts complained of were capable of ratification by a majority of shareholders, individual shareholders could not sue.
Key Quotes
"The corporation should sue in its own name and in its corporate character, or in the name of someone whom the law has appointed to be its representative."
— Wigram V-C
Subsequent Treatment
The rule now has statutory exceptions under the Companies Act 2006, ss.260–264 (derivative claims) and s.994 (unfair prejudice petitions).