Some useful information on derivative claims

Case	Type of company	Costs indemnity sought	Financial State of the company	Shareholding % (respondent/claimant)	Amount Claimed for*	Concerned a conflict of interest?	Length of proceedings
Cinematic Finance	Ltd	N/A	Doubtful solvency	0/100	N/A	Yes	N/A
Fanmailuk	Ltd	N/A	Solvent	Majority/minority	£70,000,000	Yes	N/A
Franbar	Ltd	N/A	Solvent	75/25	N/A	Yes	N/A
Hughes	Ltd	Likely	To be dissolved	50/50	£100,000+	Yes	N/A
Iesini	Ltd	N/A	Doubtful solvency	Majority/minority	N/A	Yes	4 days
Kleanthous	Ltd	N/A	Solvent	84.5/15.5	£120,000,000	Yes	N/A
Kiani	Ltd	Yes	Solvent	50/50	£296,000	Yes	1 day
Mission Capital	Plc	N/A	Solvent	N/A	N/A	Yes	N/A
Parry	Ltd	N/A	No assets	50/50	£248,577.24	Yes	N/A
Phillips	Ltd	N/A	Solvent	50/50	N/A	Yes	N/A
Seven Holdings	Ltd	N/A	Effectively no assets	50/50	£1,693,212.32	No	1 day
Stainer	Ltd	Yes	Solvent	87/0.08	£7,000,000	Yes	N/A
Stimpson	Ltd by guarantee	N/A	No assets	Majority/minority	£5,300,000	Yes	N/A

Apologies that the table extends over the end. Formatting problems are preventing editing. The final two columns "concerned conflict of interest" are all yes except for Seven Holdings. Only 2 of the cases provided details on how long the permission hearing lasted.

As derivative claims continue to pass through staying on top of them is quite useful so as to determine how successful the procedure will be. How successful derivative claims are likely to be are demonstrated by two quotes. One from Siems and one from Reisberg: Siems has noted that the 'use of the derivative claim will depend on its relationship to the unfair prejudice remedy'.[1] Reisberg has also said that success of the statutory claim will not be judged by quantity 'but by whether the rules governing the circumstance in which such an action may be brought are made more comprehensible and accessible so that, in exceptional circumstances, the commencement of a derivative claim will be regarded as a remedy worth pursing'.[2]

So far the relationship with the unfair prejudice remedy seems to be complementary rather than preferable. Claims are successful despite the availability of another remedy. As well the rules seem accessible with no lengthy trials or issues of wrongdoer control or what conduct can be ratified taking up too much of the court's time. It certainly appears that the concern that what conduct can be ratified will maintain the need to establish wrongdoer control are unsubstantiated. There has been some slight confusion with the procedure though as some courts have tended to ignore the need to establish a prima facie case. Thus in some instances courts will rigorously follow procedure from the statute. In others they will simply only address points they deem as relevant. The latter may be cost and time saving but may reduce the certainty of procedure.

In total five of the thirteen claims have successfully survived the permission stage and have been granted permission to commence a derivative claim. All 13 have survived the ex parte application (prima facie case)

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[1] M Siems, “Private Enforcement of Directors' Duties: Derivative Actions as a Global Phenomenon” UEA LAW WPS 2010-MS-1 at <http://ssrn.com/abstract=1699353>  accessed January 24, 2011

[2] A Reisberg, ‘Shadows of the Past and Back to the Future: Part 11 of the UK Companies Act (in)action’

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* or rough estimate where figure not available