MINORITY ACTION AND DIRECTOR REMOVAL
Under the English law, the removal of directors can take place by ordinary resolution in the annual general meeting, which requires simple majority vote. As stated in the Jensen case, however, Mr. Ronald is a director for life and in order to displace him it would be necessary to change the corporate articles that guarantee such perpetuity . Changes in the articles of the company require a special resolution, which means a voting majority of 75%. As the holding company became the majority shareholder after the take over, such action is then very unlikely to succed through such procedure.
Since there are several original shareholders -which constitute the minority that wants to take action- a suitable legal procedure to be taken in first instance is class action or representative action. Such legal resource works as a collective action where the personal rights of a large group, -the several shareholders- are represented by few or a single person. Thus, with the consent of the court, such minority representant(s) could promote a derivative action by suing Mr. Ronald on behalf of the company. In this action the company will not be the claimant, which constitutes an exception, and any proved damages will be payed out to the company.
Generally speaking, -according to corporate law- the firm directors are under obligation of acting in good faith and for the benefit of the company as a whole. Among the seven directors’ duties (Gubby, 2007, page 231), the minority could claim breach of at least four duties in this particular case: (1) duty to promote the success of the company, (2) duty to exercise independent judgment, (3) duty to exercise reasonable care, indiligence, and (4) duty to avoid conflict of int ...