Abstract

A statutory derivative action is a corporate action brought on behalf of and in the name of the company against a director or an officer of the company for allegedly committing a wrong to the company. A shareholder or former shareholder or an officer or former officer of the company is entitled to apply to the court for leave to commence a derivative action. This chapter explores the underlying reasons which led to the limited use of the statutory derivative action in Australia. It examines areas of defect in the legislative provisions and notes the system’s dynamism in getting around them, and then makes some suggestions for law reform to reflect the modern needs for a more effective derivative action.