In this respect the courts have held that the rule in Foss v. Harbottle (1843) 67 E.R. 189 must be observed by the trial court and it must not inquire into matters of internal management or, at the instance of a shareholder, interfere with transactions which though prima facie irregular and detrimental to the company, are capable of being rectified by an ordinary resolution of the company in a general meeting. It will be shown in due course that the learned trial judge fell into the error of inquiring into matters of internal management such as, for instance, as the complaint by one of the applicants that he has been demoted and that his post had been downgraded.
Shareholder’s right to sue for loss of profits and dividends
It cannot be disputed that the purpose for which a shareholder invests money or, to be exact, buys shares in a company, is the hope that the company will be a going concern and, thereby, be able to declare profits and pay dividends. If that should so happily happen, then as Ollennu J. (as he then was) put it in the case of Appenteng v. Bank of West Africa Ltd. [1961] G.L.R. at p. 203, “good luck to him [the shareholder].” But if the opposite should be the case, that is, where a loss is declared and no dividends are payable, Ollennu J. (as he then was) continued at the same page, “then that’s just too bad, he cannot sue anyone to compel profits to be declared where none has been made.” The reason Ollennu J. gave at p. 203 for this which seems logical, is that “a shareholder has no legal right that a company should always be a going concern.”
