A Critical Assessment of Pertinent Locus Standi Features of the Derivative Remedy under Zimbabwe's New Companies and Other Business Entities Act. (11th June 2022)

• Record Type: Journal Article
• Authors: Hamadziripi, Friedrich; Osode, Patrick C
• Is Part Of: Journal of African law. Volume 66:Number 2(2022)
• Page Start: 315
• Page End: 338
• Publication Date: 2022-06-11
• Subjects: Derivative remedy -- locus standi -- cause of action -- contemporaneous ownership rule -- shareholder threshold requirements -- the demand requirement; Law -- Africa -- Periodicals; 349.605
• DOI: 10.1017/S0021855321000516
• Languages: English
• ISSNs: 0021-8553

Abstract

Abstract: The importance and contribution of derivative litigation to the effectiveness and credibility of a jurisdiction's corporate governance system is indisputable. There is a positive correlation between good corporate governance practices, which include shareholders' rights, and investors' return on their investments. On the one hand, an overly pro-shareholder derivative scheme is vulnerable to abuse and results in unnecessary interference with company management. This may, in turn, discourage directors from entrepreneurial risk-taking and undermine enterprise efficiency. On the other hand, a complex and ineffective system of derivative litigation protects errant directors and decreases investor confidence. This article is a critical assessment of Zimbabwe's recently adopted statutory derivative remedy. The analysis focuses on five locus standi-related aspects of the new statutory derivative regime. The article highlights some major weaknesses within Zimbabwe's statutory remedy and proposes pertinent legislative amendments.