Does the Cellular Calls case present new possibilities for aggrieved shareholders?
A decision of the Witwatersrand Local Division in an action brought by a certain Mr Kalinko against the directors of Cellular Calls (Pty) Ltd and a cellular telephone service provider has caused some consternation in company law circles, inasmuch as it seems to turn the well-known rule laid down in Foss v Harbottle on its head.
That rule has two essential principles:
- Where a wrong is done to a company (including any wrong perpetrated by the directors of the company), it is the company itself that must assert its rights of recourse against the wrongdoers, and not individual shareholders. If the company fails to do so, then in certain circumstances an individual shareholder may assert those rights.
