Welcome!

To all those reading this I am David Gibbs; I am a Lecturer in Company and Commercial Law at the University of Hertfordshire.

I created this blog as a general out-let of ideas for my research, as well as keeping those interested up-to-date on my research and general interests.

I completed my PhD thesis at the University of East Anglia in 2014. The thesis was recommended for the award of PhD with no corrections. My external examiner was Prof. Simon Deakin (Cambridge) and internal examiner was Prof. Morten Hviid.
My PhD research centred on directors' duties and company law. The thesis was titled 'Non-Executive Self-Interest: Fiduciary Duties and Corporate Governance'. It was a doctrinal and empirical study on whether self-interest was suitably controlled amongst non-executive directors.

My supervisors were Prof. Mathias Siems, Prof. Duncan Sheehan, Dr. Sara Connolly and Dr. Rob Heywood

All opinions of any existing or future blogpost are my own. They do not necessarily represent the views of any of my associated institutions.
ORCID 0000-0002-6596-8536


Wednesday, 9 March 2016

Derivative Claims data

Since September I have been working with the Eastern Academic Research Consortium (EARC) as part of my Quantitative Skills Award from the British Academy. We have been working with a dataset I have collected on derivative claims under common law and statute.


The dataset consists of 46 cases looking, generally, at whether the reform of the derivative claim under the Companies Act 2006, part 11 is meeting its objectives, such as allowing claims to continuing in appropriate circumstances whilst dismissing frivolous claims, and whether there is practical convergence of shareholder protection in a sense of whether the UK will see more private enforcement of directors' duties in public companies.


Below is some of the descriptive frequency data from all of the cases observed under common law (27 cases) and statute (19 cases). Arguably there are 4 time periods for 'derivative claims' but this data is simply split in to two, common law and statute. Those four periods are: 1) 1843-1950; 2) 1950-1982; 3) 1982-2008; 4) 2008-present. The first period was Foss v Harbottle (1843) 67 ER 189 recognising majority rule but subsequently the need for exceptions. Up until Edwards v Halliwell [1950] 2 All ER 1064 when this case recognised categories of exceptions, albeit only the fraud on the minority was the true exception. This was the state of common law until 1982 when Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 recognised the criteria for setting out a prima facie case that was inserted in to the Civil Procedure Rules. Claims were brought under these procedural rules until 2008 when the Companies Act 2006, part 11 came in to force. However, the common law procedure does have some application still in respect of double derivative claims.


Ultimately this trend shows a climb down from total freedom of contract to the law recognising a need to mitigate against the harshness of separate legal personality and granting shareholders more power to protect the interests of the company from those who control it or cause it harm.


The tables below indicate the legal features of the case:


Prima facie case
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No
12
26.1
26.1
26.1
yes
34
73.9
73.9
100.0
Total
46
100.0
100.0
 

Mandatory Bar
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No
13
28.3
68.4
68.4
Yes
6
13.0
31.6
100.0
Total
19
41.3
100.0
 
Missing
System
27
58.7
  
Total
46
100.0
  

Frivolous Claims - Conduct covered
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No
38
82.6
82.6
82.6
Yes
8
17.4
17.4
100.0
Total
46
100.0
100.0
 

Strength of Case 3 - discretion
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
weak case
17
37.0
50.0
50.0
middle case
4
8.7
11.8
61.8
strong case
13
28.3
38.2
100.0
Total
34
73.9
100.0
 
Missing
System
12
26.1
  
Total
46
100.0
  

Permission - successful derivative claim
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No
27
58.7
58.7
58.7
Yes
19
41.3
41.3
100.0
Total
46
100.0
100.0
 

The following tables represent practical features of the case:


Company Form
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
plc
4
8.7
8.7
8.7
Ltd (s)
35
76.1
76.1
84.8
other
7
15.2
15.2
100.0
Total
46
100.0
100.0
 

Company Shareholding
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Minority(c)/Majority(d)
17
37.0
37.0
37.0
Equal
14
30.4
30.4
67.4
Majority(c)
2
4.3
4.3
71.7
dispersed minority(c)/majority(d)
9
19.6
19.6
91.3
shareholder(c)/director(d)
4
8.7
8.7
100.0
Total
46
100.0
100.0
 

Conduct complaint - nature of complaint
 
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Other
5
10.9
10.9
10.9
Fiduciary Breach
32
69.6
69.6
80.4
Negligence
2
4.3
4.3
84.8
Ultra vires
3
6.5
6.5
91.3
Multiple Claims 1-4
4
8.7
8.7
100.0
Total
46
100.0
100.0