Shareholders Derivative Action Research

The system of derivative action is mainly designed for minority shareholders to sue the insiders to take on legal liabilities when they infringe the benefits of the corporation, and to supervise the insiders. It was born in Anglo-American countries and gradually spread to the rest of the world. Nowadays it has become a corporate system of great importance.Derivative action, together with direct action, constitutes the shareholder action, in which it plays a great part. However, derivative action and direct action are distinct in the framework and have respective features. While the key factor of determining the different character is the value of the system, the very purpose of this thesis is hopefully to understand derivative action by clarifying the value and do some help to the application of the system in our county.This thesis starts from the history of derivative action and looks into the basis, value, framework of the system. It comes to the conclusion that although derivative action means something positive in protecting the rights and benefits of minority shareholders, this is not the heart of its value and merely a byproduct. The value of the system lies in supervising insiders, which demonstrates the independent meaning of the minority shareholders in corporate governance. It is the value that justifies the necessity of seeking a balance between realizing effective supervisal and at the same time keeping the regular workings of the corporation from the disturbance of strike suits. Thereby, the consummation of the system of derivative action and its application in our country should also comply with this value.This thesis is composed of several parts as follows:Firstly, the introduction begins with the revision 2005 of the corporate law in our country, and makes a summary description of the concept of derivative action. Then it pictures the status quo of the research in China, the problems this thesis tries to solve and the meaning of the effort..Secondly, the first part of the body of the thesis is mainly about the general of the system of derivative action. This part introduces the beginning of derivative action in England and further into its development in USA and spreading to other countries in the world.Thirdly, the second part of the body of the thesis analyses the value of derivative action .It illustrates corporate governance from corporate to mechnical and inevitable creation of derivative action. This part points out the common phenomenon of insider controlling in Chinese corporations, illustrates the great importance of derivative action to corporate governance. Fourthly, the third part of the thesis reveals the basis of the system of derivative action and the substantive law of right and theoretical foundation of procedure law. This part is one of the most important of the thesis.Fifthly, the fourth part, which makes a detailed illustration about the system of derivative action the revision 2005 of the corporate law in our country, is another indispensable component of the thesis. Through the studies of the legal relations of derivative action, limits to action right, demand requirement, security for expenses, reconciling during action, undertaking of expenses, the functions of lawyers and so on, this part explains comprehensively the concrete systems and the determinative function of the value.Sixthly, the fifth part of the thesis expounds the effect of derivative action to corporate governance in our country, and explain and appraises derivative action prescribed in Chinese Corporation Law.Finally, the thesis concludes as follows: the value of the system of derivative action is to supervising insiders. Here, the author also indicates the meaning of the research within this thesis.