This thesis studies the role of derivative claims in the English legal system in the context of protecting the company as a separate legal personality, through both the shareholders and employees acting as the derivative claim applicants. In spite of the aim of the English Law Commission to change the derivative claim to a more affordable and more accessible mechanism in the UK, still the current overly restricted approach to this mechanism prevents it to play an effective role in protecting the company. The academic literature brings several factors including the availability of other mechanisms of protection for shareholders, the cost of the derivative claim and the ambiguities in the procedural requirements as the reasons for the ineffectiveness of the derivative claim. This research argues that the derivative claim is the only direct mechanism of protection for the company as a separate legal personality, and that protection of the company extends beyond the protection of its shareholders. Therefore, the hurdles in the way of efficiency of the derivative claim should be removed and it should become a more effective mechanism of protection for the company as a whole. Although the combination of other mechanisms of accountability for directors1 could discipline directors and provide an environment, in which the derivative claim is less needed, however, they have been designed to protect the personal interests of shareholders in the first instance and might not provide a potent protection for the company in all circumstances. This thesis argues that the derivative claim could work as a complementary mechanism and provide protection for the company in situations that the other mechanisms fail to do so. In order to enhance the protection of the company through the derivative claim, the thesis proposes that the scope of derivative claims’ applicants should be extended to employees. Employees have strong incentive to protect the company because they often invest in a company with their human capital, and are deeply dependent on the company well-being for their livelihoods and their pension benefits. In order to make the derivative claim a more affordable and accessible mechanism, the thesis proposes some reforms to derivative claim procedural requirements, including the shareholders ratification and the derivative claim costs. This thesis is a comparative study. The proposals for the derivative claim procedural requirements have been inspired by the derivative claim structures in the United States and New Zealand. The financial structure of the derivative claim in both countries has reduced the risk of the derivative claim for shareholders. Moreover, studying the role of the derivative claim in these jurisdictions confirms the thesis argument that although the availability of the other mechanisms of accountability could affect the need for the derivative claim, still the derivative claim has a role to play as a complementary mechanism.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:753671 |
| Date | January 2018 |
| Creators | Safari, N. |
| Publisher | City, University of London |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://openaccess.city.ac.uk/20130/ |
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