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Arad Reisberg - One of the best experts on this subject based on the ideXlab platform.

  • Multiple Derivative Actions
    2008
    Co-Authors: Arad Reisberg
    Abstract:

    The modern tendency is for companies to have subsidiaries and associated undertakings. This tendency gives rise to the issue of whether a shareholder in a parent company may bring a Derivative Action on behalf of a subsidiary or associated company within the group. Logically an Action by a shareholder of a parent company on behalf of a subsidiary is called a 'double' Derivative Action and, if on behalf of a 'second tier' subsidiary, it would be called a 'triple' Derivative Action. It is therefore easier to refer to all these Actions as 'multiple' Derivative Actions. Such an Action may be appropriate where a shareholder in one company A can show that the directors of company A and of a subsidiary B or related company C (which may not be a direct subsidiary or a direct investment of company A), have wrongly prevented the enforcement of a cause of Action vested in subsidiary B or related company C . The Court of Final Appeal of Hong Kong in Waddington Ltd v. Chan Chun Hoo Thomas and others (FACV 15/2007) is the first reasoned decision of a higher court in any common law jurisdiction outside the US, which allows multiple Derivative Action. The purpose of this Case Comment is to discuss this case and its ramifications.

  • Derivative Actions and Corporate Governance
    2008
    Co-Authors: Arad Reisberg
    Abstract:

    © Arad Reisberg, 2007. All rights reserved. This book provides the first comprehensive law scholarship to focus solely on the subject of Derivative Actions, which is an important aspect of the current ever-expanding debate in the UK, and in other jurisdictions, about corporate governance. In particular it: (1) provides the first detailed and clear overview, commentary and theoretically informed explanation of the law governing Derivative Actions by revealing underlying principles, making it an essential resource for corporate law academics, law makers and practitioners; (2) uses these principles to suggest how the law should develop in the future; (3) provides the first, most comprehensive and detailed assessment of the new regime governing Derivative Actions under the new Companies Act 2006 including a commentary on all the new provisions of the Act on the subject; and (4) includes a comparative perspective to Derivative Actions in foreign jurisdictions focusing in particular on recent developments so as to compare and explain how the law might develop. The book attempts a fundamental rethink of the content of the Derivative Action and its objectives. Intertwining these objectives into a cohesive model of Derivative Actions, the book conceptualizes the Derivative Action mechanism and argues that Action should be taken at three parallel levels: (1) conceptual (i.e., adoption of a new framework in the guise of the 'Functional and Focused Model' as set out in the book); (2) strategic (i.e., employment of appropriate incentives and fee rules which advance the premises behind the Model); and (3) maintaining doctrinal consistency (i.e., clarification of the interAction between the Derivative Action and other remedies available to shareholders.

  • Derivative Actions and corporate governance : theory and operation
    2006
    Co-Authors: Arad Reisberg
    Abstract:

    PREFACE SUMMARY CONTENTS TABLE OF CONTENTS TABLE OF CASES TABLE OF STATUTES GLOSSARY OF TERMS A BIRD'S EYE VIEW OF THE FUNCTIONAL AND FOCUSED MODEL INTRODUCTION 0.1 BACKGROUND 0.2 THE PRIMARY OBJECTIVES OF THE BOOK 0.3 THE Derivative Action- A UNIQUE PROCEDURE? 0.4 PUBLIC AND PRIVATE COMPANIES 0.5 THE NEW PROPOSED FRAMEWORK ADVANCED BY THE BOOK 0.6 AN OVERVIEW OF THE BOOK PART I: THEORY AND PRACTICE ANALYSIS 1. SHAREHOLDER LITIGATION 1.1 INTRODUCTION 1.2 SHAREHOLDER LITIGATION AND CORPORATE GOVERNANCE 1.3 ALTERNATIVE DEVICES TO CONTROL AGENCY COSTS 1.4 Derivative ActionS VERSUS MARKET FORCES 1.5 CONCLUSION 2. THE CHOICE OF RATIONLES AND THE SOCIAL MEANNING OF Derivative ActionS 2.1 INTRODUCTION 2.2 MERITS AND DEMERITS OF Derivative ActionS 2.3 THE CHOICE OF RATIONALES: DETERRENT VERSUS COMPENSATION 2.4 UNDERSTANDING THE SOCIAL MEANING OF Derivative ActionS 2.5 CONCLUSION 3. THE DIFFICULTIES WITH CONFERRING RIGHTS ON SHAREHOLDERS TO LITIGATE 3.1 INTRODUCTION 3.2 CAN A SHAREHOLDER ADEQUATELY REPRESENT THE COMPANY? 3.3 THE COMMON LAW RESPONSE 3.4 POLICY EVALUATION: OLD MYTHS AND NEW REALITIES 3.5 CONCLUSION PART II: MAKING Derivative ActionS WORK 4. THE WAY TO REFORM AND A NEW STATUTORY Derivative Action: MUCH ADO ABOUT NOTHING? 4.1 INTRODUCTION 4.2 DEFICIENCIES IN THE PRESENT LAW AND THE APPROACH TO REFORM 4.3 A NEW STATUTORY Derivative Action (under the Companies Act 2006) 4.4 AN ASSESSMENT OF THE LIKELY IMPACT OF THE NEW REGIME 4.5 CONCLUSION 5. A PROPOSED MODEL FOR Derivative ActionS: THE FUNCTIONAL AND FOCUSED MODEL (FFM) PART I: THE FOUNDATIONS 5.1 INTRODUCTION 5.2 THE ROLE OF Derivative ActionS IN A CHANGING MENU OF GOVERNANCE 5.3 THE Derivative Action AS A CONSTRAINT ON MANAGEMENT MISCONDUCT 5.4 SYNTHESIS - THE FUNCTIONAL AND FOCUSED MODEL PART II: FFM - PROCEDURAL AND SUBSTANTIVE ASPECTS 5.5 CONCLUSION 6. FUNDING Derivative ActionS: COSTS AND FEES AS INCENTIVES TO COMMENCE LITIGATION 6.1 INTRODUCTION 6.2 THE ECONOMICS OF Derivative Action LITIGATION 6.3 A RE-EXAMINATION OF INDEMNITY COSTS ORDERS 6.4 CONCLUSION 7. PURSUING THE RESOLUTION OF THE FUNDING PROBLEM 7.1 INTRODUCTION 7.2 MENU OF OPTIONS: SOLUTIONS INVOLVING THE COMPANY AND THE SHAREHOLDER 7.3 SOLUTIONS INVOLVING THE PLAINTIFF'S ATTORNEY 7.4 INTRODUCING CONTINGENCY FEES FOR Derivative ActionS? 7.5 CONCLUSION 8. THE INTERRELATIONSHIP BETWEEN THE Derivative Action AND THE UNFAIR PREJUDICE REMEDY 8.1 INTRODUCTION 8.2 THE INTERRELATIONSHIP BETWEEN THE Derivative Action AND THE UNFAIR PREJUDICE REMEDY 8.3 THE CASE FOR RETAINING TWO SEPARATE REMEDIES 8.4 THE WAY FORWARD - PRACTICAL STEPS 8.5 CONCLUSION CONCLUSION AND FUTURE DIRECTIONS BIBLIOGRAPHY APPENDIX A: COMPANIES ACT 2006 PART 11 CHAPTER 1 INDEX

  • Theoretical Reflections on Derivative Actions: The Representative Problem
    2005
    Co-Authors: Arad Reisberg
    Abstract:

    Minority shareholders face particular difficulties where they seek redress against wrongdoing directors. This state of affairs seems to reflect an implicit acceptance both by the judiciary and the English Law Commission that is somehow undesirable that companies should be exposed to civil litigation by minority shareholders (i.e., Derivative Actions). This type of thinking is rarely (if ever) made explicit; nonetheless, it is likely to continue being the primary policy impediment to enhancing the potential utility of Derivative Actions. The purpose of this article is primarily to inquire into these restrictive standing rules and subsequently to examine two policy responses to the problem that the company lacks an authentic decision-making body to determine whether or not a Derivative Action is in the best interests of the company as a whole. The article is organized as follows. Section B discusses the problems with conferring rights on minority shareholders to litigate in respect of wrongs to the company. Subsequently, two policy responses are analyzed. First, Section C examines and assesses the competence of three bodies which may assess the merits of a Derivative Action: a committee of independent directors; an 'independent organ' of the company; and the courts. It concludes that courts should discharge the task of deciding this critical question. Section D explains that once a gate-keeper is put in place, the focus should be on establishing an expeditious means for screening and dismissing non-meritorious cases. It evaluates how well (or rather, badly) current legal screens work. Section E draws some conclusions.

  • Shareholders' Remedies: The Choice of Objectives and the Social Meaning of Derivative Actions
    2005
    Co-Authors: Arad Reisberg
    Abstract:

    The purpose of this article is to offer a wide ranging consideration of the policy objectives underlying the Derivative Action. More specifically, the article inquires into an indefinite, but fundamental, question that has received inadequate attention in the literature on corporate law theory in European or English law: what rationale or rationales justify the use of Derivative Actions? Shareholder litigation is neither the initial nor the primary protection for shareholders against managerial misconduct. It cannot be viewed in isolation from a number of mechanisms which relate to corporate governance. A variety of social and market forces also operate to hold corporate officials accountable. These mechanisms and others, coupled with the regulatory authority of governmental agencies constitute protections in the absence of private litigation. To the extent that these mechanisms effectively align the interests of mangers and shareholders, there may be less need to resort to costly litigation as a means of protecting shareholder question can also be formulated in the following manner: what role should be assigned to shareholder litigation that may, in turn, enhance the capabilities of these other mechanisms of accountability? The discussion proceeds as follows. Section II identifies the limitations of the traditional view of the Derivative Action. An initial analysis of the merits and demerits of the Derivative Action is presented in Section III. Section IV analyses the role Derivative Actions may assume in enforcing corporate accountability. The question addressed is whether its purpose is primarily to deter misconduct or simply to compensate the company for the wrongdoing. As part of this, the possible benefits and limitations of these rationales will be explored. Finally, Section V examines the public image, or expressive value, of the Derivative Action. The purpose is to determine if some of the features inherent in the Derivative Action procedure enhance or detract from Derivative Action being understood as a positive social force. The section also briefly considers strategies that can be pursued to reverse the negative effects of those forces that weaken the social meaning of Derivative Actions so that the Action is more likely to be viewed as an instrument that affirms desirable norms in the corporate setting.

Dan W. Puchniak - One of the best experts on this subject based on the ideXlab platform.

  • The Derivative Action in Asia: A Complex Reality
    2013
    Co-Authors: Dan W. Puchniak
    Abstract:

    This Article uses the Derivative Action in Asia as a lens for re-evaluating the foundational theories of Asian and comparative corporate law. It begins by demonstrating that the cultural theory of “Asian non-litigiousness” provides scant explanatory or predictive value for either the evolution or function of the Derivative Action in Asia’s leading economies. As such, this Article suggests that the theory of Asian non-litigiousness should be relegated to the dustbin of academic history. Without the black box of Asian culture to erroneously explain away potential differences between “Asian” and “Western” Derivative Actions, the reality of the Derivative Action in Asia’s leading economies becomes markedly more important. It allows evidence from the Derivative Action in Asia to be used as a valuable litmus test for three of comparative corporate law’s most important theories which all claim universal applicability (the three “grand universal theories”). This Article demonstrates, using evidence from the Derivative Action in Asia, that the claim of universal applicability, which under-pins the grand universal theories, is erroneous. Indeed, this Article turns the grand universal theories on their heads by demonstrating that they not only fail to explain the Derivative Action in Asia but also terribly mislead. As such, this Article concludes by suggesting that comparative corporate law should replace its lust for grand universal theories with a quest for understanding (rather than avoiding) the complex reality that is inherent in comparative corporate law.

  • The Derivative Action in Asia - a complex reality: Part 2
    Keeping good companies, 2012
    Co-Authors: Dan W. Puchniak
    Abstract:

    It is readily apparent that the theories of Asian cultural nonlitigiousness, common law superiority, the economically motivated and rational shareholder, and corporate law convergence terribly miss the mark. However, this does not mean that culture, legal origins, economic rationality, and convergence are irrelevant. To the contrary, they are all important - but not uniformly, not exclusively, and not in an 'Asian' sense.

  • The Derivative Action in Asia - a complex reality: Part 1
    Keeping good companies, 2012
    Co-Authors: Dan W. Puchniak
    Abstract:

    The Derivative Action in Asia presents a tantalising topic for comparative corporate law scholarship. To start, the Derivative Action, which has its historic roots in the US and UK, has become ubiquitous in the corporate law regimes of Asia's leading economies.

  • The Derivative Action: an economic, historical and practice-oriented approach
    2012
    Co-Authors: Harald Baum, Dan W. Puchniak
    Abstract:

    The Derivative Action, also known as the Derivative suit (in the United States), Aktionarsklage (Germany), kabunushi daihyo sosho (Japan), Action sociale ut singuli (France) and paisheng susong (PRC) (among others), is a global phenomenon. It originated in the common law world and is regarded by some as ‘one of the most interesting and ingenious ... accountability mechanisms for large formal organizations’. As a potentially powerful elixir for corporate governance ills, the Derivative Action has captivated lawmakers for well over a century. It is also a subject that has long intrigued academics – and rightfully so. The beauty of the Derivative Action is truly in the eye of the beholder, making it ripe for scholarly debate. Depending on one’s vantage point, it can be seen as either a functional necessity for meaningfully enforcing directors’ duties, which mitigates agency costs, or a corporate governance mechanism inherently vexed by a litany of complex procedural problems, which stifles entrepreneurship. We suspect that, after reading this book, you will conclude that the truth about the Derivative Action in Asia lies somewhere in between these two extremes. This chapter provides a general theoretical framework for the book and links the ongoing international discussion about the pros and cons of the Derivative Action with the seven jurisdiction-specific chapters in this volume. The balance of this chapter is organized on the basis of three perspectives from which Derivative Actions can be analysed. It starts, in section II, by providing an economic perspective, which identifies the primary features and functions (including the functional deficits) of the Derivative Action as a mechanism for improving the efficiency of corporate governance. It then examines a striking paradox in the economic incentives that drive Derivative Actions: most empirical evidence suggests that Derivative Actions normally result in a net economic loss for the plaintiff shareholder pursuing the Action (and even for the individual company involved), but they are still commonly viewed by most legislators and judges as an indispensable deterrent against reckless behaviour by directors, controlling shareholders and others who may owe a duty to the company. In a similar vein, this section pays special attention to the difficulty of designing a Derivative Action that incentivizes shareholders to pursue Derivative Actions, which enhance corporate governance efficiency, while at the same time preventing their abuse (i.e., the Holy Grail). Next, in section III, this chapter examines the Derivative Action from a historical perspective, by tracing its modern origins to the common law jurisprudence of the United States and the United Kingdom in the nineteenth century. The German historical experience is also briefly considered, so as to highlight its long history of rejecting the introduction of a US-/UK-style Derivative Action (until 2005), instead relying on functionally equivalent corporate governance solutions. This historical overview provides an important context for understanding the Derivative Action in Asia, as most leading Asian jurisdictions have transplanted some or all of the legal framework governing their Derivative Actions from the United States, the United Kingdom or Germany. This chapter concludes, in section IV, by viewing the Derivative Action from a practice-oriented perspective, which focuses on how the Derivative Action is actually working in selected major non-Asian jurisdictions. This section includes an examination of the United Kingdom (with a focus on the statutory Derivative Action, which was recently implemented in the Companies Act of 2006), the United States (with a focus on Delaware corporate law and the Model Business Corporations Act), France (with a focus on its role as a forerunner in Derivative Actions legislation in continental Europe) and Germany (with a focus on its recent introduction of a statutory Derivative Action that was ambitiously, but not necessarily successfully, designed to avoid the pitfalls of the US system).

  • The Derivative Action in Asia: some concluding observations
    2012
    Co-Authors: Harald Baum, Dan W. Puchniak
    Abstract:

    Context matters. Take a step back and look at some 170 years of history of Derivative Actions and at the pertinent developments on three continents, and you will see a seemingly endless regulatory quest for what we have termed the ‘Holy Grail’ of Derivative Actions regulation (i.e., the appropriate balance between the necessary incentives to ensure that Derivative Actions are pursued effectively and the indispensable safe- guards to prevent their abuse). Few, if any, legislatures or courts have been able to grasp this elusive goal; perhaps, like the Holy Grail itself, it may never be grasped. This book’s analysis of the foundational jurisdictions of the United States, the United Kingdom, Germany and France and our seven major Asian jurisdictions illustrates that, whether in the East or the West, local context is critically important.Local context matters because it varies, in unpredictable ways, from jurisdiction to jurisdiction and within each jurisdiction over time. Each jurisdiction’s local context is defined by a myriad of unique features, including its law, economy, institutions and sociopolitical environment. The limitless permutations of how these contextual features can combine is what uniquely shapes the functionality of Derivative Actions in each jurisdiction, makes the quest for the ‘Holy Grail’ so elusive and causes the Derivative Action to be so complex. In this sense, it is the complexity of each jurisdiction’s unique and evolving local context that forms the core of our comparative and functional understanding of the Derivative Action in this book.For some, our emphasis on local context and boundless complexity may disappoint. Local context and boundless complexity do not lend themselves to large overarching universal theories; and this book, unapologetically, does not provide one. There is no one answer for how the Derivative Action functions in Asia. Rather, the reality is that he Derivative Action in Asia is very much local, very much contextual and, we suspect, very inconvenient for comparative corporate law scholars who lust for grand theories.The inconvenient truth is that the Derivative Action in our seven jurisdictions does not lend itself to being coded, plugged into a regression analysis and revealed through statistical significance. It also does not lend itself to a neat taxonomy of rules or strategies. Rather, it is a phenomenon that, in all probability, can be properly understood only through an in-depth understanding of a myriad of local, highly contextual, factors that shape how the Derivative Action actually functions in practice. To add to the inconvenience, once the contextual factors are measured they have to be remeasured in the future, as they constantly evolve and do not necessarily progress in a predictable way along any ‘dependent path’.This observation may sound obvious – perhaps because it is. It is still meaningful, however, as the field of comparative corporate law has developed a proclivity for chasing grand theories. This book seeks to quell that proclivity by squarely challenging a number of the foundational comparative theories that have been used to explain Derivative Actions, shareholder litigation and corporate governance in Asia and around the world.

William L Luyben - One of the best experts on this subject based on the ideXlab platform.

  • effect of Derivative algorithm and tuning selection on the pid control of dead time processes
    Industrial & Engineering Chemistry Research, 2001
    Co-Authors: William L Luyben
    Abstract:

    Many control engineers try to avoid the use of Derivative Action in operating units. As Isaksson and Graebe have pointed out (in a presentation at Control Systems 2000, Victoria, British Columbia, May 2000), there is an “industrial myth that Derivative Action does not work.” They claim that some of this is due to the need to adjust the Derivative filter constant, in addition to the usual three parameters of PID controllers. Modern distributed control systems offer a variety of choices for the PID algorithm, including both series (interacting) and parallel (ideal). The many PID tuning methods that have been developed over the years have used different algorithms, and some are limited to a narrow range of parameter values (dead times). Most tuning methods require setting three tuning parameters, but some propose setting four parameters. All this complexity presents a confusing picture to the practitioner who is faced with trying to tune a PID controller. This paper presents a quantitative comparison of alte...

Jin Ill Park - One of the best experts on this subject based on the ideXlab platform.

  • auto tuning of reference model based pid controller using immune algorithm
    Congress on Evolutionary Computation, 2002
    Co-Authors: Won Pyo Hong, Jin Ill Park
    Abstract:

    An auto-tuning scheme of a PID controller based on the reference model has been studied using the immune algorithm for a process. Many sophisticated tuning algorithms have been tried in order to improve PID controller performance in such difficult conditions. However, in an actual plant, they are manually tuned through a trial and error procedure, and the Derivative Action is switched off. Therefore, it is difficult to tune. Simulation results of immune based tuning reveal that the suggested tuning approach is an effective approach to search for optimal or near optimal process control.

Bengt Lennartson - One of the best experts on this subject based on the ideXlab platform.

  • robust tuning of pi and pid controllers using Derivative Action despite sensor noise
    IEEE Control Systems Magazine, 2006
    Co-Authors: Birgitta Kristiansson, Bengt Lennartson
    Abstract:

    This article presents some easily understood and applied methods for close-to-optimal tuning PI and PID controllers. By optimal it means good midfrequency robustness and the best possible tradeoff between output performance and control activity. For plants with all poles on the negative real axis, a simple step response can provide adequate plant knowledge. For plants with integral Action, an impulse response or a relay experiment can be used. In all PID cases, the controller zeros can be fixed, the control activity can be varied by the filter factor, and, finally, the integral gain can be adjusted to the required damping of a step response for the closed-loop system. with this strategy, tuning a PID controller is as easy as tuning a PI controller, the difference being that the PID solution gives additional freedom for selecting slightly higher control activity which significantly improves the output performance. When the situation demands HF rolloff of the controller, the PI or PID controller can be augmented by an additional lowpass filter. In these cases, the inclusion of Derivative Action is recommended. Four of the five controller parameters are then easily found, and the remaining gain can be manually tuned to obtain a desired tradeoff between output performance and damping (MF robustness).