Lipton, Herzberg & Welsh, Understanding Company Law Chapter 17



Statutory derivative actions

A statutory derivative action which gives shareholders the right to bring an action on behalf of a company was introduced in 2000. See Lipton, Herzberg & Welsh, Understanding Company Law [17.115].

I Ramsay and B Saunders “Litigation by Shareholders and Directors: An Empirical Study of the Statutory Derivative Action” (2006)

The CASAC Report Statutory Derivative Actions (1993) formed the basis of the current legislation. This report is contained on the CAMAC website.

Some commentators have raised doubt as to whether the introduction of this right will be successful and serve as encouragement to shareholders to be more vigilant. The following two articles deal with this issue:

M. Berkahn “The Derivative Action in Australia and New Zealand: Will the Statutory Provision Improve Shareholders’ Enforcement Rights?” (1998) 10 Bond Law Review 74.

D. McDonough “Proposed New Statutory Derivative Action- Does it Go Far Enough?” (1996) 8 Bond Law Review 47.

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Minority shareholders in corporate groups

The CASAC Corporate Groups Final Report (2000) considers amendments to the Corporations Law to assist directors of corporate group companies to effectively perform their duties and also to adequately protect shareholders and outsiders. Chapter 3 of this Report deals with minority shareholders of partly owned group companies.

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Expropriation of minority shareholdings

V. Mitchell “The High Court and Minority Shareholders” (1995) 7 Bond Law Review 58 is a case note on Gambotto’s case.

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    1. 1. Why was the statutory derivative action introduced?
      Do you believe that it will be successful in achieving its aims?
    2. 2. Why does the CASAC Report on Corporate Groups consider that non-assenting shareholders in partly owned group companies are especially vulnerable? What were the major recommendations of the Report to assist minority shareholders?
    3. 3. Does the decision in Gambotto’s case properly balance the interests of majority and minority shareholders?
    4. 4. What effect do the recently inserted Compulsory Acquisition provisions of the Corporations Act (ss 664A – 665E) have on compulsory acquisitions of minority shareholdings?

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