The Cypriot derivative action is an underexplored corporate governance mechanism in literature, and scholarly analysis and commentary on Cypriot case law is limited. This paper discusses the inadequacies of shareholder remedies in Cypriot company law. In particular, it argues that the English common law derivative action as it is implemented by Cypriot company law fails to attain effective shareholder protection and to monitor mismanagement in Cypriot companies. The comparative analysis of the English and Cypriot law explores developments in English case law which have not been expressly considered by the Cypriot judiciary and indicates the difficulties that Cypriot shareholders and Cypriot courts encounter, by following the English procedural rules on derivative claims, which have long been abolished under English law and have been criticized for being inadequate to ensure effective levels of minority shareholder protection. Identifying the deficiencies of the current legal framework in Cyprus, this paper argues that the remedy is doctrinally problematic, weakening minority shareholder protection and concludes that a reform of the Cypriot derivative action is the way towards effective shareholder protection.
European Business Law Review