Derivative Actions In Perspective

A derivative action is an aggrieved minority shareholder's right of action which essentially derives from the company, and is ordinarily available to members who may seek protection in circumstances which will be addressed in this article. Whilst a claim of this nature is governed by well-entrenched common law principles in Cyprus, it is now subject to statutory regulation under English law, per the Companies Act 2006, the relevant provisions of which have brought to the fore significant substantive and procedural changes (this will be briefly dealt with below). Although these legislative developments are not applicable in Cyprus, it is nevertheless useful to refer to the concise statutory definition of a derivative action which is given as "proceedings brought by a member of a company in respect of a cause of action vested in the company and seeking relief on behalf of the company."