Context matters. Take a step back and look at some 170 years of history of derivative actions and at the pertinent developments on three continents, and you will see a seemingly endless regulatory quest for what we have termed the ‘Holy Grail’ of derivative actions regulation (i.e., the appropriate balance between the necessary incentives to ensure that derivative actions are pursued effectively and the indispensable safe- guards to prevent their abuse). Few, if any, legislatures or courts have been able to grasp this elusive goal; perhaps, like the Holy Grail itself, it may never be grasped. This book’s analysis of the foundational jurisdictions of the United States, the United Kingdom, Germany and France and our seven major Asian jurisdictions illustrates that, whether in the East or the West, local context is critically important. Local context matters because it varies, in unpredictable ways, from jurisdiction to jurisdiction and within each jurisdiction over time. Each jurisdiction’s local context is defined by a myriad of unique features, including its law, economy, institutions and sociopolitical environment. The limitless permutations of how these contextual features can combine is what uniquely shapes the functionality of derivative actions in each jurisdiction, makes the quest for the ‘Holy Grail’ so elusive and causes the derivative action to be so complex. In this sense, it is the complexity of each jurisdiction’s unique and evolving local context that forms the core of our comparative and functional understanding of the derivative action in this book. For some, our emphasis on local context and boundless complexity may disappoint. Local context and boundless complexity do not lend themselves to large overarching universal theories; and this book, unapologetically, does not provide one. There is no one answer for how the derivative action functions in Asia. Rather, the reality is that he derivative action in Asia is very much local, very much contextual and, we suspect, very inconvenient for comparative corporate law scholars who lust for grand theories. The inconvenient truth is that the derivative action in our seven jurisdictions does not lend itself to being coded, plugged into a regression analysis and revealed through statistical significance. It also does not lend itself to a neat taxonomy of rules or strategies. Rather, it is a phenomenon that, in all probability, can be properly understood only through an in-depth understanding of a myriad of local, highly contextual, factors that shape how the derivative action actually functions in practice. To add to the inconvenience, once the contextual factors are measured they have to be remeasured in the future, as they constantly evolve and do not necessarily progress in a predictable way along any ‘dependent path’. This observation may sound obvious – perhaps because it is. It is still meaningful, however, as the field of comparative corporate law has developed a proclivity for chasing grand theories. This book seeks to quell that proclivity by squarely challenging a number of the foundational comparative theories that have been used to explain derivative actions, shareholder litigation and corporate governance in Asia and around the world
