To what extent should decisions of companies' directors and controlling shareholders be challenged in litgation brought by disgruntled shareholders? The response in the United States tends to differ from that in Australia and Great Britain and to produce divergent legal rules for the regulation of shareholder litigation. Nonetheless, to some extent these dissimilar legal rules reflect common policy concerns created by shareholder litigation. This article begins with a brief sketch of the development of rules governing shareholder derivative suits, actions in which the shareholder sues on behalf of a company in which he owns shares alleging that the company has failed to pursue an action on account of a wrong done to it. It traces the subsequent evolution of controls imposed on shareholder litigation in each country, using a comparative perspective to illustrate relative strengths and deficiencies.
Deborah A. DeMott, Shareholder Litigation in the United States and Australia: Common Problems, Uncommon Solutions, 11 Sydney Law Review 259-305 (1987)