Derivative Action, "company Law"

Shareholders, as the investor of the company,is the ultimate owner of corporate's rights and interests. Under the modern corporate governance structure, the shareholders have quit from the first line of the company's management, but entrust the company directors, supervisors, managers and other senior staff members to fulfill their behalf. Since the separation of ownership and management rights, managers often impinge on shareholders'equity directly or indirectly because of their mismanagement of intentional or unintentional act. In other case, managers may refuse to charge other people's violation acts to the company for some self-interest considerations. Therefor, the corporation law set a variety of protecting measures for shareholders. According to the law, using judicial means to correct the erosion of the rights and interests is a very effective measure. It's always the final selection when it's difficult to achieve the goals through other means. In this paper,the writer's focal point is the derivative action regime and it's relevant legal issues, which is an important judicial means for the shareholders to safeguard the company's interests when directors, supervisors, managers and other senior staff members infringe the corporate's interests directly and in the same time damage the shareholders'rights indirectly. During the research to the five aspects of derivative action including basic concepts, history, regime values, system operation and localization in China, the writer wants to introduce and restate the highly controversial action system both in positive and negative aspects and make a preliminary study on its application in China.