Shareholder Derivative Litigation

The shareholder's derivative action is an action asserted by a shareholder on the corporation's behalf against a third party (usually a corporate officer) because of the corporation's failure to take some action against the third party when the corporation's interests are damaged by the third party. The shareholder's derivative action system plays an active role in the protection of the corporation's interests and the shareholders' rights. It also promotes the balance of the interests in the corporation and the perfection of the corporate governance. Thus, the derivative action becomes not only an important right of the minority shareholders', but also an important system in the modern company law. The shareholder's derivative action system was established in our new Company Law and Securities Law, which is regarded as a great advance in our legislation. However, the specific provisions of the shareholder's derivative action remain to be improved. In the thesis, the author studies the shareholder's derivative action in the angle of the balance of the interests in the corporation. The author analyzes the value of the shareholder's derivative action system, and gives suggestions to improve the derivative actions' structure. At the end of the thesis, the author points out that we should learn from the advanced legislation in other countries to perfect the shareholder's derivative action system in our country.The thesis is composed of four chapters as follows:The first chapter is about the origin of the shareholder's derivative action. At the beginning of the chapter is the overview of the shareholder's derivative action system. The definition and the characteristics of the derivative action are given. Then the author analyzes the background under which the shareholder's derivative action appears.The second chapter is about the value of the shareholder's derivative action system. The author focuses on the analysis of the important role of the derivative action in the balance of the interests between the shareholders and the corporation operators, and also between the majority shareholders and the minority shareholders.The third chapter is the concrete introduction of the derivative actions' structure. The main aim is to find a balance point between the protection of the rights and the prevention of the excessive lawsuits.The fourth chapter is about the improvement of the shareholder's derivative action system in our country. On the basis of researching the related legislation and the cases, the author evaluates the shareholder's derivative action system in our country and puts forward reasonable proposals on the improvement of the system.At the end of the thesis, the author summarizes the above four chapters, points out that we should learn from the advanced legislation in other countries to improve the shareholder's derivative action system in our country and hopes that the system will play a more active role in the balance of the interests in the corporation and the perfection of the corporate governance in our country.