Derivative Claims in Pakistan and Transplanting English Law

By

ACKNOWLEDGEMENTS

This dissertation is an opportunity for me to extend my regards to my research supervisor, my beloved friends and my family for their untiring support that they furnished throughout my research. I am grateful to them for their belief in me and the guidance that they provided me without which I would have never been able to work on and complete this research.

DECLARATION

I, (Your name), would like to adjudge that this entire dissertation is my individual work and I have not taken any sort of help from any external body. I am submitting this work for the very first time, and this work has never been submitted for any examination at academic or professional level before. Furthermore, I declare that this dissertation is demonstrating my personal views and opinions and they are not necessarily linked with my university.

Signature:

Date:

ABSTRACT

Derivative claims are those claims which the stakeholders bring for the company's benefit against the directors of the company or, in some cases, a third party that is involved in the company. However, it is called a derivative claim only when this action is taken in the interest of the company and not personally for the shareholder. The rationale behind this law was to prevent the court from making business decisions on behalf of the corporation and to avoid judicial declaration of dividends. It will then be appropriate that where the directors have, for example, refused to award dividend to a certain shareholder when other shareholders in his class have collected theirs; all that the private shareholder can do is to ask for a declaratory order or an injunction directing the board or the controlling majority to act properly. In this way, the court has maintained its sanctity by refraining from making a dividend award in place of the board while at the same time its order has led to an indirect damages award to the shareholder.

TABLE OF CONTENTS

ACKNOWLEDGEMENTSii

DECLARATIONiii

ABSTRACTiv

CHAPTER 1: INTRODUCTION1

Research Background1

Research Aim1

CHAPTER 2: LITERATURE REVIEW2

Law Regarding Derivative Claims2

Transplanting English Law5

CHAPTER 3: METHODOLOGY6

Research Design7

Ethical Concerns7

CHAPTER 4: FINDINGS9

English Legal Exceptionalism and Jurisdictional Expansion9

Strengthening the Stakeholder Principle: The Task for Corporate Law13

The Pakistani Stakeholder Principle and Its Acceptance - A Peep into the "Real World"14

Derivative Actions and Class/Representative Actions15

CHAPTER 5: CONCLUSION18

The Need for Derivative Actions in Pakistan21

Limitation of the Study24

BIBLIOGRAPHY25

CHAPTER 1: INTRODUCTION

Research Background

Derivative claims are those claims which the stakeholders bring for the company's benefit against the directors of the company or, in some cases, a third party that is involved in the company. However, it is called a derivative claim only when this action is taken in the interest of the company and not personally for the shareholder. The companies Act 2006 (part 11), which was enforced in 2007 on October 1, includes the new conditions regarding the derivative action. This may result in increase in the count of derivative claims or actions being taken.

So far, the purpose of these provisional rules regarding the derivative actions was to bring forward limited cases to the ...