Shareholder Derivative Litigation in China : Empirical Findings and Comparative Analysis

This paper presents the results of a comprehensive empirical study on China's derivative suits as introduced in the 2005 Company Law reform that provides insight into the way Chinese courts have interpreted and applied this remedy. It is found that the statutory regime appears to have had a noticeable impact in terms of the number of cases brought thereunder and the benefits realized from them. However, the key finding that all cases involve private companies comes as a disappointment given the intended role of China's derivative suits in improving the corporate governance of public companies. The study also produces other important findings on various aspects of the derivative suit remedy. From a comparative perspective, the empirical findings are analysed and based on such analysis, reform proposals are set out to enhance the efficacy of the regime of shareholder derivative suits in China