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Shareholder lawsuits comprise two categories: direct suits and derivative actions. While singling out derivative actions as the quintessential minority shareholder protection mechanism, comparative corporate law scholarship, "Law and Finance" literature, and the World Bank's influential Doing Business reports have all failed to appreciate fundamental legal and functional differences between derivative actions and direct suits, as well as the value of direct suits as shareholder protection mechanisms. Consequently, one of the world's most powerful and intluential institutions perpetuates a misleading view of shareholder protection around the world and promotes reforms that fail to achieve the desired policy objectives. This Article offers a functional, comparative framework of shareholder lawsuits, and a taxonomy of direct suits that classifies how different types provide legal redress against diverse harms to shareholder interests. Drawing on examples from leading civil and common law jurisdictions in the Asia-Pacific, Europe, and North America, this Article shows that direct suits protect shareholders by providing some tangible advantage or alleviation of some specific detriment to the shareholder-plaintiff. shareholders generally. or both, through a wide range of monetary and non-monetary outcomes. Through this comparative analysis of direct suits in diverse jurisdictions, this Article sheds new light on the utility of direct suits for protecting minority shareholders and underscores the perils that arise when persons unskilled in comparative law engage in applied comparative law. [ABSTRACT FROM AUTHOR]

Small and medium enterprises (SMEs) are important to most economies, but the laws of close corporation entities used by SMEs are underrepresented in comparative corporate law scholarship. This Article critically analyses 'withdrawal' regimes in Germany's GmbH (Austritt aus wichtigem Grund) and the UK's private company limited by shares (unfair prejudice remedy) that respond to shareholder conflicts in close corporations. Comparative analysis reveals how the two jurisdictions differ in treatment of 'non-fault' scenarios and their underlying visions of shareholder protection. Potential reform of the UK's withdrawal regime based on German and Singapore law is also explored. [ABSTRACT FROM AUTHOR]

Oppressed, outvoted, and outgunned, minority shareholders have an obvious solution for their woes: vote with their feet, sell their shares, and leave the company. But this "Wall Street Rule" is only available to shareholders in publicly listed corporations; shareholders in close corporations--privately owned business entities with no market for their shares--do not have the option of easy exit. Legal solutions which enable the shareholder to voluntarily exit a company with their capital such as the oppression or unfair prejudice remedies in US and Anglo- Commonwealth corporate law--what this Article classifies as "withdrawal remedies"--are therefore vital in close corporations. However, until relatively recently, shareholders in Japan's close corporations had no access to withdrawal under corporate law, as neither of Japan's then-dominant close corporation forms offered it. By revealing how shareholder litigants, attorneys, and judges in Japan responded to the absence of withdrawal, this Article shows how Japan's experience was no outlier among nations, but instead powerfully demonstrates the importance of withdrawal remedies in practice. Later, withdrawal remedies at law for close corporations became available in Japan for the first time with the watershed Kaisha-hō (Companies Act) of 2005, which introduced a new close corporation form, the Gōdō Kaisha (GK). This Article analyzes the challenges facing Japan's new withdrawal regime and shows how comparative corporate law--armed with the law and experience of withdrawal in the United States, the United Kingdom, and Germany--offers valuable insights for the development of withdrawal in the world's second largest developed economy. [ABSTRACT FROM AUTHOR]

Since the UK adopted the world's first stewardship code in 2010, stewardship codes have proliferated across Asia. Given the UK Code's prominence, it is tempting to assume that every other stewardship code performs the same function as the UK Code. This assumption belies the truth: all these codes--regardless of whether they have in fact drawn inspiration from the UK Code--have taken different trajectories due to each adopting its jurisdiction's distinctive institutional and legal context. Using empirical evidence and in-depth case studies of stewardship in Japan and Singapore, this Article reveals how any reception of United Kingdom-style stewardship concepts is only skin deep. Even where the text of stewardship codes in Asia resemble the UK Code in form, their functional impact on corporate governance significantly departs from, or even runs counter to, the intended functions of the UK Code. This Article illustrates how stewardship codes in Asia have been used as a convenient vehicle for local governments and/or market players to achieve their own particular interests through an inexpensive, nonbinding, and malleable vehicle, the formal adoption of which sends a signal of "good corporate governance" to the rest of the world. While such practices explain and contextualize the widespread adoption of stewardship codes in Asia, they also compound the challenge of drawing positive or normative conclusions from this development. The observation advanced in this Article is important as leading corporate governance scholars, prominent international organizations, and market participants, have appeared content to draw such conclusions, unaware that stewardship codes generally do not fulfill a similar function to the UK Code in Asia. This Article concludes by explaining how adopting globally recognized mechanisms of "good corporate governance" at a superficial formal level, and then altering their function to serve local purposes, appears to be a rising trend in corporate governance in Asia (and elsewhere). This phenomenon, which we coin "faux convergence," calls for the reexamination of important and impactful theories about corporate governance convergence. As an initial foray, this Article develops an expanded taxonomy of corporate governance convergence and lays the foundation for future research on "faux convergence.". [ABSTRACT FROM AUTHOR]

When a company suffers loss due to a wrongful act perpetrated against the company, the company’s shareholders suffer where the value of their shares or dividends decreases. However, in the UK and in Commonwealth jurisdictions, such shareholders have in principle no personal recourse against the wrongdoer because their loss is merely ‘reflective’ of the company’s loss; the loss is for the company alone to recover. This ‘reflective loss principle’ as it stands cannot be fully justified by the policy considerations offered in its support. I argue that the most convincing rationale for the principle is to preserve the primacy of the company’s internal governance arrangements in the corporate litigation context. I propose a framework reconstructing the reflective loss principle as a ‘priority rule’ under which resolution of the company’s claim takes precedence over the shareholder’s personal claim, but with an ‘exit exception’ that permits shareholders who exit the company to pursue their own claims. My proposal explains the seeming contradiction that while shareholders may not recover reflective losses via a personal claim, they may recover what are essentially reflective losses through a court-ordered buyout on an unfair prejudice petition, and brings much needed balance and clarity to the law. [ABSTRACT FROM AUTHOR]