Comparative Study of Multiple Derivative Claim in Iranian and English Law

Abstract

In most legal systems, direct derivative claim has been accepted. The shareholder can thus sue on behalf of company against director, executive manager, inspector and even third parties that damaged the company. In Iranian law, the action is just possible in joint stock company and against director and executive manager. In multiple derivative claim, parent company’s shareholder can bring an action against the same persons in subsidiary or sub-subsidiary. Contrary to standard derivative claim, there is not consensus about multiple derivative claim in legal systems even among scholars. This advice was criticised on reasons such as separation of legal entity from its shareholders, separation of shareholder’s property from company’s property, the exceptional nature of derivative claim. Conversely, it has been accepted on the standing of parent company’s shareholder to file a lawsuit, meeting the interest, the necessity of external supervision on managing the corporate. It has been apparently aknowleged in English law and the shareholder is able to bring such an action. This mechanism has not been accepted in Iranian law, while it can play a role in inducing individuals to invest in companies and securing deterrence, so it deserve to foresee it in Iranian law.

Keywords

• parent company
• subsidiary
• multiple derivative claim
• shareholder