On Shareholder Derivative Action Settlement

In shareholder derivative action, parties entitled to settlement may motion to settle. After verifying the settlement agreement which is reached through negotiation by court, the settlement agreement is legally binding. This is defined shareholder derivative action settlement. Although Article 150 and Article 152 in Company Law regulate the litigation right, defendant, lawsuit basis and prerequisite procedure, it is still far away from a mature shareholder derivative action system. Indeed, litigation is one of the most useful methods to solve problems between parties. But, court judgment is definitely not the only way out. In some cases, settlement is more efficient from the perspective of lawsuit benefit. This is also the truth for shareholder derivative action. On the threshold of establishing shareholder derivative action system in China, the research on settlement is absolutely necessary and critical. In the introduction part of this thesis, the general idea of shareholder derivative action in U.K., Japan and U.S. is provided. On the basis of study of shareholder derivative action settlement rules in U.S., this paper is aimed to analyze the theories, settlement parties' rights, settlement agreement and the effect of shareholder derivative action settlement. The thesis is composed of four parts as follows:The first part is about the theoretical basis and functions of shareholder derivative action settlement. After the introduction of shareholder derivative action settlement, the analysis is developed from jurisprudential and procedural perspective separately, following positive and negative functions of the said settlement.In the second part, a discussion on parties' settlement rights and right limitation is carried out, which contains plaintiff, defendant, company and court.The following part analyses settlement agreement. This part includes the production, content and effective procedure, proving the important role of settlement agreement.The last part brings forward settlement's effect on the on-going suit, future suit, plaintiff, defendant, company and shareholders not participating the suit.In close, a summary of the thesis lists the issues been analyzed in the paper. The author's research on shareholder derivative action could encourage more discussion on the said issue.