Study On Shareholder’s Derivative Action

Shareholder’s derivative action means when the legitimate interests of thecompany are encroached and the company refuse to take actions, the company’sshareholders with legal qualification can legally established procedure to exercisetheir right on behalf of the company according to legal procedures, so as to restore thelegal interests of the company.This system was from the United Kingdom, but it was developed in the UnitedStates; most of the world’s countries with a market economy have the relevantprovisions. In order to further adapt to the development of market economy, regulatethe behaviors of directors and shareholders as well as the small and mediumshareholders, the shareholder’s derivative action is defined in the “Company Law”.But the new company law for the provisions of this system is also more general, someof the key issues are not clearly explained.Shareholder’s derivative action system ignored the company’s independent legalpersonality and rejected the principles of the company’s majority capital, which madehuge impact on the traditional legal system. Shareholder’s derivative action systemcan be called a different state system, but “difference states” doesn’t means thatshareholder’s derivative action should suffer the negative reputation because it is thedirect embodiment of fairness and justice, because the system itself is set up toprotect the rights and interests of small and medium shareholders.This essay is about four main parts, the first part is about the concept of theshareholder’s derivative action, the second part made a detailed analysis on theChina’s system of shareholder’s derivative action the third part of the essay is thecomparative research about some foreign countries’ shareholder’s derivative action onthe defendant, the plaintiff, the company’s position in the litigation process and theprocedures. the fourth part is about how to improve the China’s system of shareholder’s derivative action.