Whilst it is also possible for shareholders to bring a derivative action at common law, a statutory derivative action is the preferable avenue for redress given that it is subject to the court’s leave and with the wide discretion afforded to the court under the companies ordinance (cap 622) to make orders to cure unfair prejudice and. The regime came into force in july 2005, following concerns raised in relation to the limited scope for redress under the traditional common law derivative action regime, which strictly required the shareholder to prove fraud on the minority (at least to a degree of equitable fraud or abuse of power. This action, known as the statutory derivative action, was introduced to rectify the perceived inadequacies of the common law derivative action, on the recommendation of several government reports 2 these reports perceived the statutory derivative action as an.
The common law’s solution was the derivative action, providing a route for interested parties to bypass the wrongdoers and, with the court’s permission, take an action in the name of the. The common law derivative action in hong kong essay [pic] the chinese university this paper firstly briefly introduces the current co-existence of the common law derivative action and the statutory derivative action (the sda) and figure out potential problems which lead us to think about whether we should abolish the cda the main part. Remedies for protection of companies’ or members’ interests introduction 1 in chapter 9 on whether the common law derivative action regime should still be maintained z “multiple” derivative action is maintainable in hong kong under the common law the reasons for allowing members to bring a simple.
Shareholders' rights - part i - common law derivative action it is a general principle of company law that an individual shareholder cannot sue for wrongs done to a company or complain of any internal irregularities. Under common law, the derivative action is an equitable remedy and subject to the doctrine of clean hands in general, a shareholder seeking to sue derivatively must act bona fide for the benefit of the company and not in order to further an ulterior purpose. The rules of derivative action set up in the final supreme court interpretation, together with those provided in the amendment to the company law, will be the whole statutory derivative action introduced in china. Company law and shareholders' rights is the first specialist work on shareholders' rights from a hong kong legal perspective it covers the common law actions by exceptions to the rule in foss v harbottle, the new statutory derivative action, and the twin statutory minority remedies of unfair prejudice and just and equitable winding-up. It is argued by some that hong kong needs a class action system, which will give people better access to justice and consumers a fairer share of settlements and the argument is made, of course.
1 the derivative action: an economic, historical and practice-oriented approach harald baum and dan w puchniak i introduction the derivative action, also known as the derivative suit (in the united. The derivative action in asia provides a framework for analysing its function, history and practical application and examines in detail how derivative actions law works in practice in seven important asian jurisdictions (china, hong kong, common law tradition lays a path for reform 114 6singapore’s derivative actions: mundanely non. Therefore, hong kong law allows for both a statutory and common law multiple derivative action the british virgin islands the current position in the british virgin islands (“bvi”) is that it appears that no multiple derivative action may be brought. Justice ribeiro held that section 168b of the hong kong companies ordinance (cap 32) at the time did not allow for the multiple derivative action and that such actions continued to be available under the common law.
Derivative action n a lawsuit brought by a corporation shareholder against the directors, management and/or other shareholders of the corporation, for a failure by management in effect, the suing shareholder claims to be acting on behalf of the corporation, because the directors and management are failing to exercise their authority for the. 13 the common law derivative action the exceptions to the proper plaintiff rule in foss v harbottle allow the minority shareholders under some limited conditions to sue on behalf of the company the common law derivative action (the cda) is applied based on these exceptions. Two derivative actions respectively under common law and the statute, given that the damages, if any, obtained in the derivative action would go to the company and the shareholder may be exposed to two sets of costs.
On january 27, 2016, in the case of rajeev saumitra v neetu singh & ors1, the delhi high court (‘delhi hc’) passed a significant order dealing with the two issues lying at the core of company law (i) breach of directors’ duties and (ii) the sustainability of a derivative action as a shareholder remedy. Company law - minority shareholder protection - 21 march 2007 common law derivative action directors owe fd to company if this is breached, the proper plaintiff is the company: foss v harbottle a company is a separate person and majority rule applies. The statutory derivative action (‘sda’), also referred to as the representative action, 1 was enacted by various legislatures around the world to unveil ∗ llb, llm (bond), solicitor (qld), tutor in corporate and commercial law. The case of sinwa ss (hk) co ltd v morten innhaug  sghc 157 demonstrates that the test for bringing a common law derivative action is not an easy one to pass however, the court will apply.
This paper analyses the statutory derivative action in malaysia, and compares it with the law in the united kingdom, australia and singapore we argue that the statutory action is unlikely to overcome many of the uncertainties and difficulties of the common law derivative action keywords. The continuing availability of common law double derivative actions – where the members of the allegedly wronged company's holding entity bring a derivative action on behalf of the company − has been confirmed by the high court, despite codification of the law governing derivative actions by part 11 of the companies act 2006. The champion arrives: multiple derivative action in malaysia 1 comment filing of the multiple derivative action in malaysia this brings malaysia in line with the common law developments in hong kong and the uk. Critique of the hong kong common law courts’ interpretation of the governing law of macau sar, which belongs to a civil law legal tradition, is highlightedthe concluding part of the paper identifies the challenges revealed out of the single and multiple derivative actions.