Corporate Avengers Need Not Be Angels: Rethinking Good Faith in the Derivative Action

Abstract

To obtain leave to bring a statutory derivative action in many Commonwealth jurisdictions, the claimant must show that she is acting in good faith. Of late, this requirement of good faith has evolved into a serious obstacle for claimants by imposing impossible demands on them. This trend would disqualify and deter claimants that are otherwise best equipped or motivated to bring derivative claims if left unchecked, and severely weaken the role of the statutory derivative action in corporate law and governance. This article critiques recent jurisprudence, and proposes alternative approaches that address concerns underlying the judicial development of good faith.

Samantha S Tang

Lecturer

My research interests include corporate law, shareholder activism, and ESG investing.