Natural Justice - An Alternative Ground for Intervention in Corporate Decision Making?

Abstract

This paper seeks to show that the existing regulation of corporate decision making fails to provide a comprehensive shield to minority shareholders. Instead of urging another addition to the plethora of statutory controls over corporations the authors suggest a more radical, but simple solution to this lacuna. This radical and simple solution would be to apply the rules of natural justice to corporate decision making, thus providing a safety net of last resort for minority shareholders who are unable to gain the protection of a statutory or common law remedy. TTiere is no doubt that at present the law governing the decision making powers of companies, at a board level or in the general meeting, are inadequate, at least insofar as procedural matters are concerned. As injustice may arise as a result of this inadequacy it will be submitted that the principles of natural justice should apply to company decisions. Against this backdrop this article considers the existing regulation of corporate decisions before examining the bases for the imposition of natural justice. The grounds for denying the implication of natural justice will also be discussed. Ultimately we will conclude that there is no insurmountable barrier to the application of the rules of natural justice to corporate decision making organs. The authors acknowledge that the solution we propose involves important policy considerations. This policy debate has been addressed in other articles.1 Our paper is based on the premise that once it is accepted that it is possible to move or adjust the private/public boundary then important advantages could occur to minority shareholders.