Derivative Action- An Impartial Right given to Minority Shareholders under Pakistan’s Legislation

Abstract

Financial interests of minority shareholders are uncertain and volatile in the Pakistan Company Act. The Act does not have a significant redress in the shape of a derivative action mechanism, which is a key policing tool for management accountability and transparency. The fact that derivative lawsuits are not available in Pakistan is a consequence of restrictions on common law actions, regulatory obstacles, levying litigation expenses for a derivative action, restriction of the contingency fee, and unavailability of fiduciary responsibilities for directors and shareholders with majority voting powers. The legislatures, policy-makers, and regulators must take account of the confiscation of company assets and design mechanisms to inspect and compensate the control shareholders' misdemeanors. Thus critical analysis of the litigation tendency of the people here and study of derivative action for minority shareholder’s protection and to ascertain its effectiveness and remedial measures will be done in this study.