The doctrine of contemporaneous share ownership and aspects of locus standi in the new derivative action

Abstract

Bearing in mind that the purpose of the derivative action is to empower minority shareholders and other stakeholders to protect the legal interests of the company when those charged with its management wrongfully fail to do so, the class of applicants is vital to the efficacy of the statutory derivative action. This article discusses various aspects of locus standi to institute a derivative action under s 165 of the South African Companies Act 71 of 2008. These include the doctrine of contemporaneous ownership of shares, the continuing interest principle, the multiple derivative action, and the classes of applicants who are given standing to bring derivative actions, the last of which notably embraces trade unions. A comparative approach is adopted that takes into account the leading common­law jurisdictions, including Canada, Australia, the United Kingdom, New Zealand and the United States of America, as well as the laws of Nigeria, Ghana and Botswana.