Minority Shareholders Dissertation
“… Of course if the majority are abusing their powers, and are depriving the minority of their rights, that is an entirely different thing.” MacDougall v Gardiner (1875) 1 Ch D 13, 25, per Mellish LJ.
With reference to decided case law and relevant statutory provisions, critically evaluate whether the remedies available to minority shareholders adequately protect them and consider whether this protection is in the interests of the company.
Introduction
This paper will explore several aspects of statutory derivative action that was lately introduced with the amended Companies Act 2006 (‘CA 2006).[1] The position at common law will to be considered briefly for the purposes of background illustration, with the main discourse concentrating on the statute itself, along with academic critique and references to some of the cases that have essayed to elucidate it since its enactment. Subsequently, reaching a conclusion, identifying whether or not the statutory derivative action and other remedies are more accessible for shareholders and whether it has been able to fully address concerns of discouraging frivolous accusations made against directors.
Background
Actions by the minority shareholders of a company, in the interest of the company, are referred to as derivative claims; typically when evidence exists of majority shareholders abusing power.[2] The courts have found difficulties in their endeavours to arrive at equilibrium between safeguarding minority shareholders from the dominants exploitation of power and the ethos of ‘majority rule’[3]. This is far from adequate. On the other hand derivative actions are significant as they have the potential to disrupt the management of the company[4]. Indeed, the need to strike an optimum balance has been a primary ambition of the reformers[5].
Setting the Context
Imagine this example: an SME, XYZ Ltd, has an annual turnover of £10 million. Within the organisation, there are two shareholder directors with a 30% holding of the issued share capital. You are one of the four other shareholders who hold a 10% share capital each. In order to raise finances for a business scheme that the minority believe will be fruitless, and that would act to hamper the organizations reputation (and as a consequence, their profits), the company director shareholders increase share capital and issue “non-voting preference” shares. As long as there are no existing shareholder agreements in place, then the directors have the authority to implement the scheme. The directors are in command of sufficient shareholder power to force the minority shareholders into agreement, rendering the requirement to obtain their permission irrelevant. Minority shareholders, therefore, have limited power to terminate such plans from continuing, unless they go can reach an agreement with the directors or take their case to court.
The Common Law: The Rule in Foss v Harbottle
The courts efforts to avoid hearing derivative claims, is one of the major issues for constituents of an organization endeavouring to find remedies for misgovernment and corruption of their enterprise, by way of legal action[6]. The courts, in Foss v Harbottle (1843),[7] interpreted the statutory contract, the principle of ‘separate legal personality’, the ethos of internal management and the ‘majority rule’ principle, into a code of practice and procedures for filing an action[8]. In this case, members of an enterprise brought an action in an effort to recover damages the company suffered as a result of the defendants. It was held the damages suffered, were injured by the organization as a whole, and not solely by the claimants, and that as a consequence, it was the responsibility of the majority to deliberate upon their conduct in the general meetings.
Lord Davey, in Burland v Earle (1902)[9], expounds further upon this principle stating:
“it is an elementary principle of the law…that the Court will not interfere with the internal management of companies acting within their powers…in order to redress a wrong done to the company or to recover money or damages alleged to be due to the company, the action should prima facie be brought by the company itself.”
The stance persisted at common law as a rule with two limbs as Jenkins LJ elucidates in Edwards v Halliwell (1950):
“(i) the proper claimant in an action in respect of a wrong done to a company is the company itself as per the doctrine established in Salomon[10]; and (ii) no individual member of a company is allowed to maintain an action where the alleged wrong is a transaction which might be made binding on the company by a simple majority of its members.” [11]
The rule in Foss v Harbottle confronted difficulties when a claim was brought by a company, but its directors did not desire to effect an action, and were in breach themselves.[12] Several efforts were made to address this, with some potent holdings in Edwards v Halliwell involving “wrongdoer control” and “fraud on the minority”, that were later explained in more detail by Vinelott J in Prudential Assurance v Newman Industries (No.2)[13].
Statutory Derivative Actions
Derivative action proceedings, by an individual of an enterprise, are summarized in Section 260(1) of the CA 2006, firstly in regard to which actions are considered as vested in the enterprises interest, and secondly, in regard to obtain relief on the company’s behalf. Section 260(2) restrains those who may bring about a claim under Chapter 11, or the efforts to carry proceedings of the court under section 994 (i.e. member protection for unfair prejudice). Section 260(3) of the CA 2006, restricts derivative claim cases that can be filled, under Chapter 11, to actions occurring from a proposed or actual act or omission concerning; duty breach or breach of trust by a corporation director, default, and negligence. The claim can be against both a director and another individual. In respect to s.260 CA 2006, it is of no consequence whether the alleged injury was committed prior to, or after the individual essaying to file a derivative claim become a member or shareholder of the organization.[14] The term ‘director’ is defined as incorporating both current and former directors[15]. Civil Procedure Rule 19.9 advises on the appropriate procedures for instigating a statutory derivative claim.
Comparison with Common Law
Section 260(3) of the act is much more encompassing than the position at common law, regarding claims against directors for a breach of their company responsibilities. In cases that involve a breach of the duty, the act requires that the directors exercise reasonable care, skill and diligence[16]. What is most notable is that it is not necessary to exhibit “wrongdoer control” or “fraud on the minority”, this means that a claim can be filled against a director even when they have acted bona fide and have not personally benefited.[17]
The two-stage procedure
In order for a derivative claim to be permitted to continue, the responsibility rests with the member to show that there is a case prima facie[18]. It is not required that evidence is completed by the defendant, each case will be contemplated on the basis of evidence alone. Where no prima facie evidence can be found, then from this point, the court has to dismiss the claim. The question of when permission will be granted is dealt with in Section 263(2) of the CA 2006. Upon the court being convinced that an individual behaving in accordance with section 172 – with the duty to increase the success of the company – it provides that the courts must refuse to grant authorization to pursue a claim. The court will not allow permission if the actions in question result from an act or omission that has not yet happened; and if permission is given, it likely to be ratified immediately by the organizations board of directors. Providing that the claim made is not one of the following circumstances, then the court may continue to take the other factors in s.263(3) into consideration; such as:
“(a) whether the claim is in good faith, (b) the importance that a person acting in accordance with the duty to promote the success of the company would attach to continuing it, (c) whether the cause of action results from an act or omission that is yet to occur and in the circumstances it would be likely to be authorised by the company before it occurs or ratified after it occurs; (d) whether the cause of action arises from an act or omission that has already occurred and in the circumstances would be likely to be ratified by the company; (e) whether the company has decided not to pursue the claim; and (f) whether the act or omission in respect of which the claim is brought gives rise to a cause of action that the member could pursue in his own right rather than on behalf of the company.”
In derivative claims cases, the court will usually review evidence provided by members of the enterprise that have not portrayed a personal interest claims being brought.[19] The ensuing segment explores and develops upon the principle in the Smith v Croft (No.2)[20] case, which has irrefutably been subject to countless criticism[21].
Upon the court deciding to progress to the second stage of a derivative claim case, they then have liberty to decide whether to direct the defendant business to present their evidence, and subsequently upon the hearing, may refuse or award permission, discharge the claim, or suspend the proceedings, or provide any other orders they deem appropriate.[22]
Statutory Protection Against Unfair Prejudice
There are provisions in place that bestow judge’s discretion in deliberating on unfair prejudice within Sections 994-996 of CA 2006. As a result, shareholders are able to claim for unfair prejudice remedies on the basis that the company’s undertakings have been unfairly detrimental to their interests.[23]
The impact of Statutory Derivative Actions
It was held that none of the prerequisite components were present in the case of Mission Capital plc v Sinclair (2008)[24]. As a result the objective test was utilised, to consider the discretionary elements, and to decide whether the individual was conducting himself, in correspondence with the “directors duty” – to endorse the success of the organization – and also whether shareholders would be interested in pursuing a claim. It was affirmed in the negative. In the case of Franbar Holdings v Patel (2009)[25], likewise, it was held unnecessary for them to maintain a derivative claim as the primary enterprise was already in pursuit of claim themselves, founded on the same factual allegations. If the court was to enable the aforementioned cases to succeed it would have opened up the flood gates of litigation, thus, as a result, shareholders would be able pursue their own rights, as opposed to acting on behalf of the company; for the remainder. Under s.994 both shareholders could bring an action.
Lewison J’s judgement offers an exceptional examination of the two-stage approach in Iesini v Westrip Holdings (2010)[26]. According to the judge, the court must begin by establishing whether a case exists prima facie on the grounds of the evidence offered by the applicant, only taking into account that the organizations bona fida actions have arisen from a director’s breach of duty. Secondly, the court is obligated to develop more than a case prima facie. They need to arrive at a perspective founded on the requirements of sections 263(2)(a) and 263(3)(b). Any indication that a director, had been acting under a duty to encourage the company’s success, will influence the outcome of a continuing claim. Additionally, in regard of s.263(4)[27], the court admitted that ‘it is not easy to understand’ and maintained that they must first be convinced that members of a company making an interim application, do not have vested financial interest in the result of claims case (other than their shareholder interests in the enterprise)’[28]. The continuation of a derivative claim in this case was not authorised.
In contrast a derivative claim regarding an alleged breach of duty against the defendant, was permitted to continue in Kiani v Cooper (2010)[29]. The court, affirmed in this case, that the standard for a derivative claim had been meet as it was a case of fiduciary duty breach that the claimant made. In their deliberation, the courts reviewed the decision by Lewison J in Iesini.[30] In their application of the objective test, the court reasoned that the claimant was acting bona fide, and that the director acting in congruence with s.263(3)(a) -to promote the success of the company- would want to continue the claim. On page 13, the problems presented by section 263(2) are addressed:
“Of course some directors might properly in accordance with that duty wish to continue the claim while others equally properly would reach the opposite conclusion”.
In Stainer v Lee (2010)[31] the court held that a continuation of a claim would be sought by a director who was acting in the company’s best interests; taking into consideration the case of Franbar and Iesini in their application of the objective tests in sections 263(2)(a) and 263(3)(b) in arriving at their decision. Similarly to the aforementioned cases, a grant for the continuation of a claim was given. However, permission would be restricted to disclosure alone, from this point forth, the claimant is to obtain further permission.
What is evident is that all the cases that we have reviewed so far, share a commonality, in that they all concern a breach of duty by directors for failure to provide sufficient financial information that had not been previously permissible at common law.
Academic Opinion
The need to establish a case prima facie for the initial stage is of little importance, which is evident from the handful of cases that have been interpreted in line with the new statute. Nevertheless, between s.263(2)(a) establishing a case prima facie the difference is marginal; and the changes are particularly advantageous for companied of a smaller size, as they move towards achieving the goals of cost effectiveness and efficiency as outlined in Pt 11 [32].
Critics have maintained that listed CA 2006 factors act as a preventive measures to derivative claim cases. This is due to the fact that the court stipulates that consideration must be paid to directors, acting in accordance with s.172. This attaches to the derivate claim and dispenses with the common law prerequisite of ‘wrongdoer control’.[33] On the contrary, it has been contended that derivative claims are on the whole far more flexible than before, on viewing the Act in practice. This is because the courts are no longer forced to follow the rigid approach precedents of the past and because the Act has the scope to incorporate new situations[34], the case of Kiani being a primary example of this. Academics maintain that the manner in which a statutory derivative claims can be brought, have been considerably modernised and significantly expanded, particularly regarding the stipulation that evidence is no longer prerequisite in order to prove fraud on the minority, or control by delinquent directors[35].
Shareholders may still be confronted with difficulties in their attempts to illustrate and thus satisfy the mandatory requirements concerning duty breaches. Despite endeavouring to readdress a balance between the principles of ‘good faith’ of director’s duty with meritorious claims, it is apparent that directors still have the advantage. This is because satisfying the extensive and complex list of obligatory requirements for duty breaches presents the shareholders with more difficulties[36]. As a result, even genuine shareholders seeking to pursue a derivative claim may admit defeat upon being faced with the challenge of satisfying such requirements[37]. In spite of the changes that have been made, it is evident that the rules concerning statutory derivative claims have by no means significantly modified the system. Consequently, there still remains little incentive for shareholders, be it genuine or not, to pursue a claim[38].
One of the major logistical problems to surmount is the cost that is involved in launching a derivative action[39]. The court, under CPR 19.9E, may command the company to compensate the cost of a derivative claim to compensate the claimant against accountability for any costs sustained by creating a claim. Indemnification costs application remains the same as the stance at common law. It was held in Wallersteiner v Moir (No.2)[40] that compensation for derivative claim may be provided by the company, for the shareholder who instigated the actions, upon the completion of the trial[41]. Lord Denning, holding in the minority, affirmed that an option of contingency fees could be implemented, in the case of Wallersteiner. Following legislative reformation[42], Lawyers may now accept cases on a conditional basis, such as ‘no win, no fee’ cases where they are only paid upon winning a case[43].
Generally, it has been contended that the statutory alterations, regarding derivative claims have been inadequate in fulfilling their objectives. However, the consignment of derivative claims in a statutory position has meant that there is a greater transparency with the claim. Nevertheless, this transparency is weakened by the indifference of the courts’ regarding how pertinent considerations are to be evaluated, and the systems they will follow.[44]
In spite of the ambitions laid down in the introduction of the statutory procedure of the CA 2006, it has failed to address the numerous concerns that formerly acted as a deterrent to shareholders seeking derivative actions. Consequently, the extent to which a derivative claim has been effective, in acting as an instrument to guaranteeing corporate governance is limited[45].
The attitudes of the courts within cases such as Mission Capital and Franbar may provide company directors with a certain degree of security, but in reality, the influence upon litigation remains uncertain; directors are potentially more exposed now[46]. As is typical with new statutory implementation, there will be a degree of uncertainty to begin with, as the courts are hesitant to open the ‘floodgates of litigation’. Undeniably, there has been a move in favour toward shareholder power, however derivative claims are heavily supervised by the courts supervise[47]. It is unlikely that there will be a rise in litigation cases in this area, or that the period of uncertainty will endure. Reisberg’s proclaims English courts, equipped with restrictive litigation upon which to justify their judgements, will maintain restrictive their restrictive practices[48]. It is also improbable that we will see judges, in their implementation of statutory derivative action procedures, desert their traditional restrictive, pragmatic, commercial approach.[49]
Disqualifying Directors
Notably, under the Companies Directors Disqualification Act 1986, disqualification of a defaulting director is possible.
The purpose of the disqualification scheme is to allow for inadequate directors to be discharged and to safeguard the public from those individuals who have demonstrated that they are a risk creditors. However, they have not elucidated what exactly determines an “unfit” director. Nonetheless, taking into consideration existing case law, it seems that gross incompetence and recklessness, are the protocol for disqualification of directors. Jonathan Parker J, in Re Barings Plc (No.5) when disqualifying all three directors affirmed that
“…Directors have, both collectively and individually, a continuing duty to acquire and maintain a sufficient knowledge and understanding of the company's business to enable them properly to discharge their duties as directors.” [50]
The judge implies here that conduct, which is simply incompetent or dishonest, may be regarded as “unfit”. What is noteworthy is that the courts are evidently willing to disqualify directors. Notably, numerous cases indicate that the courts are prepared to disqualify directors who “have nevertheless been lax in attending to accounting matters and have engaged in conduct which overall illustrates an element of recklessness”, regardless of their conduct being bona fide. In Re Linvale, Ltd[51], it was maintained that, despite there being no evidence of directors intentionally attempting creditor defraud, they were still held to be unfit on the grounds that they were incapable of making the repayments.
It can therefore be contended that, a lack of diligence is a convincing ground for the disqualification directors of diminished, or almost diminished enterprises. However, is the disqualification of directors sufficient as a deterrent to ensure directors perform their duties with care? Studies seem to indicate that the possibility of disqualification is ineffectual as a means of inspiring directors to conduct themselves appropriately within their organisations. The studies have also indicated that it has been relatively easy for disqualified directors to re-establish themselves in employment, which further evidences that potential for disqualification is limited as a tool for prevention mal-conduct. Expenses are also a significant aspect obstructing disqualification claims. As Hick has identified, the procedure for disqualification is expensive for all parties involved. He implies that it is problematic that anyone is capable of being appointed as a director, yet thousands of pounds can be lost in the process of disqualifying an individual.
The legislation surrounding the disqualification of directors does not suffice as device to monitor and guarantee that directors carry out their duties correctly.
‘Just and Equitable’ Winding-Up
Under section 122(1)(g) Insolvency Act 1986 power is granted to the court to close a company on “just and equitable grounds”. It is required that, individual(s) wishing to make a claim, convince the court that there will be sufficient funds available for distribution to company members upon the closure of the establishment. Additionally, those wishing to file a claim must come to the court with “clean hands”; if any responsibility can be attributed to the claimant, in respect of the issues raised in the claim, then the claimant(s) application is unlikely to be authorised.
Shareholder requests for just and equitable company closure, afford the courts a chance to examine internal undertakings of an enterprise. The courts are prepared to take in to consideration the motives that have influenced the conduct of the directors, however the burden of proof lies on the claimant to establish that intervention is required. The deterioration of confidence, in an enterprises management, or the exclusion of minority shareholders from managerial decisions, provide an example of circumstances that may merit a “just and equitable” closure.
In such cases, it is inevitably maintained by the minority (shareholders) that the organisation is a quasi-partnership, and resultantly, that they are entitled to be included in decisions concerning company management. There is an assumption with Quasi-partnerships that shareholders will actively participate in the governing of an enterprise.[52] To exclude shareholders from managerial decisions is both and unfair and could result in them wanting the sell back their share to the majority without any concessions on the original purchase price. Each case is unique and therefore the outcome will depend on the facts of each case; either way derivative claim litigation cases remain costly.
Funding the fight
Initially, it would seem that majority shareholders are in position of advantage as they have access to company finances in order to fund the litigation claims; whereas minority shareholders have limited pool of resources, regardless of whether or not their case is of merit. However, the court will issue injunctions to prevent the majority using company money to fund the case, and thus to preclude inequality in resources from hindering the progress of justice. Derivative claim disputes are costly both financially and emotionally. It is beneficial for organisations to take preventative measures so these kinds of cases do not arise. Perhaps by creating formal shareholder agreements at the company’s conception; although this approach could be quite convoluted, it saves considerable time and resources in the long term.
Conclusion
Conclusively, it may be affirmed that whilst the new statutory claim has increased transparency and defined the stance at law in greater detail, in comparison with the common law, little has altered in relation to shareholder accessibility or the prevention of frivolous claims. Furthermore, due to the wide spectrum of discretion afforded to the judges in applying the objective test, with the two-stage procedure it has a deterrent effect on all claims, including those genuine. As Dignam and Lowry maintain above, the statutory enactment regarding derivative claims was indubitably an opportunity missed; given the extensive, convoluted list of prerequisites. By allowing the courts discretion to the courts the legal position without doubt remains in the same position, and therefore it has not managed to find equilibrium, with the statute, that it endeavoured to create.
Bibliography
Books
Dignam A and Lowry J, Company Law, 5th ed. (Oxford, Oxford University Press 2009).
Keenan D, Smith and Keenan’s Company Law 12th ed. (Essex UK, Pearson Education, 2002).
Lowry L and Reisberg A, Pettet's Company Law: Company and Capital Markets Law, 3rd ed. (London: Pearson, 2009).
Mayson S, D French and C Ryan, Company Law, 21st ed. (Oxford, Oxford University Press 2004).
Articles
Arsalidou D, “Litigation culture and the new statutory derivative claim” in Company Lawyer 2009, 30(7), 205-210.
Gibbs D, “Has the statutory derivative claim fulfilled its objectives? A prima facie case and the mandatory bar: Part 1” in Company Lawyer 2011, 32(2), 41-45.
Gibbs D, “Has the statutory derivative claim fulfilled its objectives? The hypothetical director and CSR: Part 2” in Company Lawyer 2011, 32(3), 76-82.
Keay A & Loughrey J, “Derivative proceedings in a brave new world for company management and shareholders” in Journal of Business Law 2010, 3, 151-178.
Lightman D, “The Role of the Company at the Permission Stage in the Statutory Derivative Claim” in Civil Justice Quarterly 2011, 30(1), 23-32.
Ma Fang, “A Challenge for China: Is it Possible to Introduce Unfair Prejudice Remedies? Part 1” in International Company and Commercial Law Review 2009, 20(12), 417-426.
Ma Fang, “The Deficiencies of Derivative Actions in China” in Company Lawyer 2010, 31(5), 150-159.
Reisberg A, “Shadows of the Past and Back to the Future: Part 11 of the UK Companies Act 2006 (in)action” in European Company and Financial Law Review 2009, 219, 225.
Sykes JP, “The continuing paradox: a critique of minority shareholder and derivative claims under the Companies Act” in Comparative Justice Quarterly 2010, 29(2), 205-234.
Legislation
· Companies Directors Disqualification Act 1986
· Companies Act 2006.
· Courts and Legal Services Act 1990
· Insolvency Act 1986
Cases
· Barings Plc (No.5) [2000] 1 BCLC 523
· Burland v Earle [1902] AC 83, PC
· Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
· Edwards v Halliwell (1950) 2 All ER 1064.
· Foss v Harbottle (1843) 67 ER 189.
· Franbar Holdings Ltd. v Patel and others [2009] 1 B.C.L.C. 1.
· Halle v Trax BW Ltd [2000] BCC 1020.
· Re Linvale, Ltd [1993] BCLC 654
· Iesini and others v Westrip Holdings Ltd and others [2010] All ER (D) 108.
· Kiani v Cooper and others [2010] EWHC 577 (Ch).
· Mission Capital plc v Sinclair and another [2008] All ER (D) 225.
· Prudential Assurance Co Ltd v Newman Industries Ltd (No.2) [1982] Ch 204, CA.
· Salomon v A. Salomon & Co Ltd [1897] AC 22.
· Smith v Croft (No.2)[1988] Ch 114.
· Stainer v Lee and others [2010] EWHC 1539 (Ch).
· Wallersteiner v Moir (No.2) [1975] QB 373, CA.
Other Written Sources
Hansard, HL Vol.681, col.883 (May 9, 2006).
Footnotes
[1] Section 260-264 of the Company Act 2006
[2] D Keenan, Smith and Keenan’s Company Law 12th ed. (Essex UK, Pearson Education, 2002) p 267.
[3] A Dignam and J Lowry, Company Law, 5th ed. (Oxford, Oxford University Press 2009), p 174.
[4] Fang Ma, “The Deficiencies of Derivative Actions in China” in Company Lawyer 2010, 31(5), 150-159.
[5] Hansard, HL Vol.681, col.883 (May 9, 2006).
[6] S Mayson, D French and C Ryan, Company Law, 21st ed. (Oxford, Oxford University Press 2004) p 593.
[7] Foss v Harbottle (1843) 67 ER 189.
[8] Dignam & Lowry p 174.
[9] Burland v Earle [1902] AC 83, PC
[10] Salomon v A. Salomon & Co Ltd [1897] AC 22.
[11] 2 All ER 1064.
[12] Keenan pp 267-284.
[13] Prudential Assurance Co Ltd v Newman Industries Ltd (No.2) [1982] Ch 204, CA.
[14] Subsection 260(5)(c) of the Companies Act 2006.
[15] Subsection 260(5)(a) and (b) of the Companies Act 2006.
[16] Dignam & Lowry p 187.
[17] Ibid.
[18] Ibid. p 188.
[19] Section 263(4) of the Companies Act 2006.
[20] Smith v Croft (No.2)[1988] Ch 114.
[21] Dignam & Lowry (n 2) p 189.
[22] D Lightman, “The Role of the Company at the Permission Stage in the Statutory Derivative Claim” in Civil Justice Quarterly 2011, 30(1), 23-32.
[23] Fang Ma, “A Challenge for China: Is it Possible to Introduce Unfair Prejudice Remedies? Part 1” in International Company and Commercial Law Review 2009, 20(12), 417-426.
[24] Mission Capital plc v Sinclair and another [2008] All ER (D) 225.
[25] Franbar Holdings Ltd. v Patel and others [2009] 1 B.C.L.C. 1.
[26] Iesini and others v Westrip Holdings Ltd and others [2010] All ER (D) 108.
[27] “In considering whether to give permission (or leave) the court shall have particular regard to any evidence before it as to the views of members of the company who have no personal interest, direct or indirect, in the matter.”
[28] Quoting Levison J.
[29] Kiani v Cooper and others [2010] EWHC 577 (Ch).
[30] Iesini and others v Westrip Holdings Ltd and others [2010] All ER (D) 108.
[31] Stainer v Lee and others [2010] EWHC 1539 (Ch).
[32] D Gibbs, “Has the statutory derivative claim fulfilled its objectives? A prima facie case and the mandatory bar: Part 1” in Company Lawyer 2011, 32(2), 41-45.
[33] Dignam & Lowry (n 2) p 188.
[34] D Gibbs, “Has the statutory derivative claim fulfilled its objectives? The hypothetical director and CSR: Part 2” in Company Lawyer 2011, 32(3), 76-82.
[35] JP Sykes, “The continuing paradox: a critique of minority shareholder and derivative claims under the Companies Act” in Comparative Justice Quarterly 2010, 29(2), 205-234.
[36] Gibbs (n 34).
[37] J Lowry and A Reisberg, Pettet's Company Law: Company and Capital Markets Law, 3rd edn (London: Pearson, 2009), p.237.
[38] Gibbs (n 34).
[39] Dignam & Lowry p 191.
[40] Wallersteiner v Moir (No.2)[1975] QB 373, CA.
[41] Although see Halle v Trax BW Ltd [2000] BCC 1020.
[42] The Courts and Legal Services Act 1990 now allows conditional fee agreements.
[43] Dignam & Lowry p 191.
[44] Gibbs (n 35).
[45] Dignam & Lowry (n 2) p 194.
[46] D Arsalidou, “Litigation culture and the new statutory derivative claim” in Company Lawyer 2009, 30(7), 205-210.
[47] A Keay & J Loughrey, “Derivative proceedings in a brave new world for company management and shareholders” in Journal of Business Law 2010, 3, 151-178.
[48] A Reisberg, “Shadows of the Past and Back to the Future: Part 11 of the UK Companies Act 2006 (in)action” in European Company and Financial Law Review 2009, 219, 225.
[49] Keay & Loughrey (n 48).
[50] [2000] 1 BCLC 523
[51] [1993] BCLC 654
[52] Ebrahimi v Westbourne Galleries Ltd [1973] AC 360