Duke University Scho
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Shareholder Litigation in Australia and the United States: Common Problems, Uncommon Solutions Deborah A. DeMott 11 Sydney L. Rev. 259 (1987) |
ABSTRACT:
Although all common law systems provide for the use of shareholder derivative suits on the principle that the right of action belongs prima facie to the company, there are considerable difference between the limitations imposed on shareholders attempting to bring suit in the various legal systems, as well as a variety of unique problems that have been created by the evolution of the derivative suit doctrine in the various countries. Professor DeMott looks at the foundations of the derivative suit as they were created by Foss v. Harbottle in the Commonwealth tradition and Hawes v. City of Oakland in the United States and compares the principles, such as judicial non-interference in corporate affairs, that formed the demand requirements as they exist in the respective legal cultures. This examination includes some discussion of the expansion of potential causes of action against companies under regulations promulgated by the Securities and Exchange Commission in the United States and certain statutes in Commonwealth countries that give individual shareholders a separate right to sue on grounds of oppression, as well as a comparison of the effects of these difference. From there, the article looks at some current controversies that have arisen in the two systems: the use of litigation committees by companies in the United States to persuade courts to dismiss demand-excused derivative actions and the legislation, mainly in the form of oppression statutes, that has liberated the traditional limitiations on shareholders attempting to bring derivative suits in the Commonwealth system. Professor DeMott examines the likely effect of these developments on future derivative actions in the two systems and the problems that each has or likely will create for the traditional limitations of shareholder action. She concludes by pointing out, however, the similar trend to liberate shareholders' ability to bring a cause of action, while institutional differences in the legal systems overall that contribute to a different attitude toward derivative suits in the United States and the Commonwealth countries will tend to limit their use in Commonwealth countries regardless of this evolution.
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