Corporate Litigation As A Device To Protect Minority Shareholders

When corporate governance mechanisms fail, litigation is a tool that shareholders must be able to use in order to enforce their rights and/or to repair the damages caused. Here, the author inquires into the practice and realties of minority shareholder litigation in both France and the UK. In order to gain an insight into the basis that exists for the protection of minority shareholders, the paper starts with a review of the rights conferred to shareholders and the duties held by directors. Following this is an examination of the legal tools offered to minority shareholders in case of abuse by directors and/or controlling shareholders, which reveals key overlaps and discrepancies in both jurisdictions. Ultimately, a balance must be struck between an invasive interventionist approach and a non-interference method. At the same time, the author argues that this must not distract law-makers from ensuring a more efficient system for minority shareholders who are already in a somewhat vulnerable position. The subject matter of the essay is of particular interest since shareholder activism and litigation have drastically increased as a result of the recent credit crisis.