State the rule in Foss-vs- Harbottle, making clear the purpose and the rational underlying the rule.

• The rule in Foss V. Harbottle is the majority rule. It describes a policy of courts not to interfere with internal affairs of companies acting within their powers.
• It was enunciated in Foss V. Harbottle (1843)
• The rule is constituted three principles namely
Proper plaintiff
 Internal management
 Irregularity principle
Edwards V. Halliwell
• The rule in Foss V. Harbottle
Prevents multiplicity of actions.
 Promotes democracy in the management of company affairs.
 Discourages frivolous and incompetent actions
 Re-asserts the rule in Salomon V. Salomon and Co. Ltd.

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