Introduction A derivative action is a mechanism
of equity that permits a member or a minority shareholder of a
company to raise an action on the company's behalf when it
refuses to bring such an action itself. The derivative character of
such an action is evident because:
- the judgments are given in the
company's favour, so that the plaintiff obtains no direct
benefit; and
- the plaintiff can sue only if the
company can sue itself, so that if the company is dissolved no
derivative action can be brought.(1)
Examples of derivative actions
As it has been elaborated in a number of previous cases, in
order for a derivative action to be raised, there must be both
evidence of fraud and of wrongdoers controlling the company to the
extent that the company cannot be made a plaintiff.
