THE ENFORCEMENT OF OUTSIDER‐RIGHTS UNDER SECTION 20 (1) OF THE COMPANIES ACT 1948
| DOI | http://doi.org/10.1111/j.1468-2230.1972.tb02354.x |
| Date | 01 July 1972 |
| Author | G. D. GoldbergB.A |
| Published date | 01 July 1972 |
THE ENFORCEMENT OF OUTSIDER-RIGHTS
UNDER SECTION
20
(1)
OF
THE
COMPANIES ACT
1948
IN
the preface to the second edition of his book on
The Principles
of
Modern
Company Law
Professor Gower wrote
:
“
My many discussions with Mr. Wedderburn were particularly
helpful
to
me and
I
regret that it was not until after this
edition had gone to press that
I
had the advantage of reading
the final results of
his
researches into the
Foss
v.
Harbottle
rule which will be published in the forthcoming issue
of
the
Cambridge Law Journal.”
The present writer’s concern is not with the general principles
underlying the application of the rule in
Foss
V.
Harbottle,
as to
which he is content to adopt, with respect, the views of Professor
Wedderburn there referred to. But he has long been worried by
Professor Wedderburn’s conclusions on the interaction
of
that rule
with the matter comprised in the title of this note and, in particular,
by the exaggeration which he believes is inherent in Professor
Wedderburn’s assertion that
:
“
a
member can compel the company not to depart from the
contract with him under the articles even
if
that means
indirectly the enforcement
of
‘
outsider ’-rights vested in either
third parties
or
himself,
so
long as, but only
so
long
as,
he
sues
qua
member and not
qua
outsider.”
In
contrast, Professor Gower’s corresponding proposition in his
second edition stated:
‘‘
.
.
.
the memorandum and articles have
no direct contractual effect in
so
far as they purport to confer rights
or
obligations on a member otherwise than in his capacity of a
member.”
Obviously there could be no reconciliation of such contradictory
opinions, but having read Professor Gower’s prefatory sentence
quoted above one had hoped to find in his third edition an attempt
to
justify one hypothesis at the expense
of
the other
or
to suggest
a
third solution. Such hopes have, in the event, been disappointed;
and the disappointment is all the keener because Professor Wedder-
burn was
a
co-editor of that last edition, in which the discussion
consists only of setting out the opposing points
of
view with cita-
1
London,
1957,
p.
vi.
2
[1957]
C.L.J.
194;
continued
in
[1968]
C.L.J.
at
p.
93.
3
j19571
C.L.J.
at
p.
513.
London,
1969.
1:
.4t
pp. 263-2G5.
LOC.
cit.,
p.
257.
362
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