Cardinal Principle of Corporate Management

The cardinal principle of corporate management is the rule by the majority shareholders. A resolution of majority shareholders passed at a duly convened

and constituted meeting is binding on the other members. This rule “Was laid down in Foss vs. Harbottle (1843). The exceptions to the rule recognised

over a period of time include:

(i) where decision relates to matters ultra vires the company;

(ii) where the act complained of constitutes fraud over the minority;

(iii) where the action is illegal; and

(iv) where a special resolution was required by the Articles and an ordinary resolution was passed by the company.

In the given problm, B has been stripped off most of his executive powers. The relevant issue is that B’ s executive powers could have been conferred

upon him either through the Articles of Association or through Agreement of Service.

Where B derives his powers through Articles, the same cannot be withdrawn by

an ordinary resolution since amendment of ArtiCles require special resolution.

On the other hand, if his powers are derived from Service Agreement, B may have

an action for breach of contract if the resolution conflicts with the terms of the contract.

Since the facts of the given problem lack necessary details as to the source of B’s executive powers, it may not be possible to suggest the exact best

remedies available to B.