NO DERIVATIVE SUIT POSSIBLE UNDER THE LAWS OF THE NETHERLANDS ANTILLES
Derivative suits may help to improve responsible management
A derivative suit is a civil lawsuit filed by shareholders on behalf of a corporation (they sue on the basis of a representative capacity) asserting rights of the corporation in the absence of corporate action to protect those rights. Derivative suits are an interesting tool in the event the shareholders want the corporation to initiate legal proceedings against members of the management and/or supervisory board.
I advocate the incorporation of the concept of derivative suit in the Netherlands Antilles Corporate Code. Current and future members of the management board almost always have a certain conflict of interests (team spirit, loyalty, co-responsibility) which can influence the decision whether or not to initiate legal action against a (former) (co-) director. Maarten Kroeze, in his 2004 thesis ‘Afgeleide schade en afgeleide actie’ (Derivative loss and derivative suit), argues in favor of a derivative suit.
According to Kroeze, a derivative suit contributes to an adequate enforcement of corporate law and other standards of conduct, which has a standard-setting and preventive effect and contributes in turn to responsible management. Recent legal economic-research, discussed by Kroeze, has shown that improved protection of minority interests by, for example, instituting a derivate suit, results in more efficient and better developed capital markets.
Karel Frielink
Attorney (Lawyer) / Partner
