Mapping Types of Shareholder Lawsuits Across Jurisdictions

Research Handbook on Shareholder Litigation by Jessica Erickson, Sean Griffith, David Webber and Verity Winship, eds., 2018

Fordham Law Legal Studies Research Paper No. 3011444

ECGI - Law Working Paper No. 363/2017

50 Pages Posted: 2 Aug 2017 Last revised: 14 Oct 2019

See all articles by Martin Gelter

Martin Gelter

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Date Written: July 2, 2018

Abstract

Shareholder litigation has been a prominent topic in the comparative corporate governance literature for decades. However, scholars trained in a particular jurisdiction often tend to look for types of lawsuits familiar from their home turf. In particular, the English-language literature has typically focused on derivative litigation, often from a somewhat US-centric or UK-centric perspective, in spite of the fact that derivative suits constitute only a minority of shareholder actions even in these jurisdictions.

To broaden the functional perspective in the comparative analysis of shareholder litigation, this chapter attempts to create a (likely incomplete) taxonomy of shareholder lawsuits across countries. While the distinction between derivative suits and direct class actions in the US is largely familiar, many other jurisdictions employ different types of shareholder lawsuits. In doing so, we can identify some patterns that may in part reflect influence between jurisdictions reflecting legal families or legal origins. The derivative suit has risen to prominence in the United States as a frequently used mechanism, from where it has spread to a number of Asian civil law jurisdictions. In the United Kingdom and other “Commonwealth” countries, where it also has a long tradition, it is often eclipsed by the “unfair prejudice” or “oppression” remedy. In the civil law world, derivative litigation and close equivalents exist, but often another form of shareholder litigation takes a more prominent role, namely litigation regarding the validity of shareholder resolutions.

After setting up the taxonomy, this chapter explores the main reasons that explain why specific types are pervasive in particular jurisdictions, analyzing especially standing requirements, allocation of cost and risk between plaintiffs and defendants, and access to information by plaintiffs. Finally, the chapter discusses lawsuits seeking to rescind shareholder decisions in Germany as an example for a frequently used type of litigation outside the American dichotomy of derivative and direct suits.

Keywords: Corporate Governance, Comparative Corporate Law, Shareholder Lawsuits, Derivative Suits, Direct Suits, Unfair Prejudice, Inquiry Proceedings, Rescission, Nullification, Courts, Discovery

JEL Classification: K22, K41

Suggested Citation

Gelter, Martin, Mapping Types of Shareholder Lawsuits Across Jurisdictions (July 2, 2018). Research Handbook on Shareholder Litigation by Jessica Erickson, Sean Griffith, David Webber and Verity Winship, eds., 2018; Fordham Law Legal Studies Research Paper No. 3011444; ECGI - Law Working Paper No. 363/2017. Available at SSRN: https://ssrn.com/abstract=3011444

Martin Gelter (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States
646-312-8752 (Phone)

HOME PAGE: http://www.fordham.edu/info/23135/martin_gelter

European Corporate Governance Institute (ECGI)

HOME PAGE: http://ecgi.global/users/martin-gelter

Register to save articles to
your library

Register

Paper statistics

Downloads
354
Abstract Views
1,293
rank
84,653
PlumX Metrics