The Common Law Derivative Action in Hong Kong
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THE CHINESE UNIVERSITY OF HONG KONG
School of Accountancy
ACY 3151 D– Company Law
Preserve The Common Law Derivative Action in Hong Kong
Presented to
Professor C.K. LOW
Submitted by
Tony BAI Dongyi; Ashley CHEN Xi; Ri REN Xinyu; Zoe ZHOU Beinan
30 April 2010
Abstract
This paper is a response to the First Phase Companies Ordinance Rewrite Consultation Paper Question 7 whether we should abolish the common law derivative action (the CDA) currently retained by sec. 168BC (4) in the amended Companies Ordinance (2004).
This paper firstly briefly introduces the current co-existence of the common law derivative action and the statutory derivative action (the SDA) and figure out potential problems which lead us to think about whether we should abolish the CDA.
The main part of this paper discusses five arguable aspects from both the con sides and the pro sides of whether abolishing the CDA. This paper discusses the CCASS system which disables many shareholders to use the SDA; the rights of minority shareholders of offshore companies who cannot use the SDA; the international context regarding the CDA in many other common law jurisdictions; the potential confusions and complications with and without the co-existence and some pitfalls of the CDA which are minor and can be ignored.
On the discussion of the above five aspects, the authors find that the CDA overrides the SDA in respect of each issue at the current time in Hong Kong, therefore this paper reaches a conclusion that Hong Kong should preserve the CDA at the current stage.
Upon the disagreement of the abolishment of the CDA, the authors also provide some further recommendations to help improve the current situations regarding the co-existence of the CDA and the SDA.
TABLE OF CONTENTS
Abstract 2
Table of Contents 3
1. Introduction 5 1.1 The Facts of Foss v Harbottle Case 5 1.2 The Rules of Foss v Harbottle Case 5 1.3 The Common Law Derivative Action 6 1.4 The Drawbacks of the Common Law
THE CHINESE UNIVERSITY OF HONG KONG
School of Accountancy
ACY 3151 D– Company Law
Preserve The Common Law Derivative Action in Hong Kong
Presented to
Professor C.K. LOW
Submitted by
Tony BAI Dongyi; Ashley CHEN Xi; Ri REN Xinyu; Zoe ZHOU Beinan
30 April 2010
Abstract
This paper is a response to the First Phase Companies Ordinance Rewrite Consultation Paper Question 7 whether we should abolish the common law derivative action (the CDA) currently retained by sec. 168BC (4) in the amended Companies Ordinance (2004).
This paper firstly briefly introduces the current co-existence of the common law derivative action and the statutory derivative action (the SDA) and figure out potential problems which lead us to think about whether we should abolish the CDA.
The main part of this paper discusses five arguable aspects from both the con sides and the pro sides of whether abolishing the CDA. This paper discusses the CCASS system which disables many shareholders to use the SDA; the rights of minority shareholders of offshore companies who cannot use the SDA; the international context regarding the CDA in many other common law jurisdictions; the potential confusions and complications with and without the co-existence and some pitfalls of the CDA which are minor and can be ignored.
On the discussion of the above five aspects, the authors find that the CDA overrides the SDA in respect of each issue at the current time in Hong Kong, therefore this paper reaches a conclusion that Hong Kong should preserve the CDA at the current stage.
Upon the disagreement of the abolishment of the CDA, the authors also provide some further recommendations to help improve the current situations regarding the co-existence of the CDA and the SDA.
TABLE OF CONTENTS
Abstract 2
Table of Contents 3
1. Introduction 5 1.1 The Facts of Foss v Harbottle Case 5 1.2 The Rules of Foss v Harbottle Case 5 1.3 The Common Law Derivative Action 6 1.4 The Drawbacks of the Common Law
References: The statutory derivative action: now showing near you, Paul von Nessen S.H. Goo Chee Keong Low, 2008, Journal of Business Law Griggs, L. (2002). A Statutory Derivative Action: Lessons That May Be Learnt From its Past. Retrieved April 2010, from Australasian Legal Information Institute: http://www.austlii.edu.au/au/journals/UWSLRev/2002/4.html Li, X Multiple statutory derivative actions, 18th April 2010, David M. Webb, Retrieved on April 24th 2010 from http://www.webb-site.com/articles/CO2010.asp Companies Ordinance (2004) [2] Li, X. (2006). A comparative study of shareholders ' derivative actions. Uitgaven vanwege het Instituut voor Ondernemingsrecht. [4] Section 2 Companies Ordinance (2004) [5] S.H Goo, Multiple derivative action and common law derivative action revised: a tale of two jurisdictions p9 [14] LI Xiaoning, 2006, A comparative study of shareholders ' derivative actions. Engeland, the United States, Germany and China. Pp19-22 [15] P