Explain the division of power between the Board of directors and General Meeting of Shareholders.

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The fiction theory, also named natural entity theory or organic theory, describes that the legal person has no actual reality, no mind, no willing, the legal person exists only in law.
The division of power between the board of directors and the general meeting of members has been relatively settled in Anglo-Australian law since the decision of Lord Clauson in Scott v Scott in 1943. This case considered the interpretation of the then default constitutional provision2 regarding management of a company, which gave management power to the board of directors, subject to regulations passed by the general meeting. The Court read down the general meeting's power to interfere with board decisions by regulation and held that board power in this situation is paramount.
Since then - the default constitutional provisions have been changed in Australia and the United Kingdom to further entrench the management role of the board. In Australia there is no longer any mention of the general meeting in the replaceable rule in s 198A of the Corporations Act 2001 (Cth), which simply provides that the company is to be managed by or under the direction of the board. In the UK, Table A3 does not go quite as far, in that it still refers to the possibility of the general meeting giving a direction to the board, but this must be done by special resolution.
What then are the options for shareholders who are unhappy with the management of companies in which they have invested? The Court of Appeal said in John Shaw & Sons (Salford) Ltd v Shaw that shareholders unhappy with the board's exercise of management power should either alter the articles of the company (now constitution) or refuse to re-elect the directors of whose actions they disapprove.

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ekkarill92 answered 1 year ago

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