Peter Hayden outlines a beneficial decision for investors in hedge funds wishing to bring multiple derivative actions
The starting point when considering a derivative action is the first limb of the well cited rule in Foss v Harbottle (1843) 67 ER 189, namely that the proper plaintiff in an action in respect of a wrong alleged to be done to the company is prima facie the company itself. There are several exceptions to this rule which allow a shareholder to bring a derivative action on behalf of the company. However, it was originally envisaged that such a claim would be brought by a person holding shares in the company which had the cause of action.
The crucial question that arises is whether a person holding shares in a parent company, which has suffered an indirect loss as a result of the direct loss suffered by the subsidiary, can bring a derivative action on behalf of the subsidiary.
In the context of a hedge fund registered in the , the point usually arises because investors are shareholders in feeder funds. The
