What is the difference between Derivative action and Statutory derivative action?
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Firstly, Derviative action is the exception of Foss v Harbottle. It is also called the Common Law dericvative action. To fulfill this action, there are 2 components. The first one is the "fraud of monority" which is the abuse of controlling power. It means that the directors or the majority secure a benefit at the expense of the company. The abuse of power results in the personal gain. The second component is that the "Equitable fraud". It refers to the breach of fiduciary duty and negligence reculting personl gain. This action can be brought when the directors or the management cuasing loss to the company on the whole, not only for the minority shareholders. Secondly, the Statutory derivative action consists of 2 elements too. That first one is "misconduct". It refers to the fraud, negligence, breach of duty or default in complience with any Ordinance or the rule of law. It is has the wider meaning than common law derivative action. The second component is that "Leave should be given". It means that the leave will be given if the court thinks that it is in the interests of the company, there is a serious issue to be tried or the company did not take action to protect itself deligently, and the member serving a written notice to the company.
Mr. Tong, shareholders(22% of the issued shares, associating with his wife and their company RED SUN CORPORATION) of FORTUNE GROUP LIMITED
2. The specified company
FORTUNE GROUP LIMITED (the Company)
3. Respondent(s)(the persons against whom the claim(s) is brought)
Two directors of the Company, Mr Chang, chief executive officer and executive director of the Company, and Mr George Yeung, chairman and an executive director of the Company.
4. Legal problem involved
The agency cost refers to three dimensions: direct contracting cost, monitoring cost and residual and unsolved conflicts...
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