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Just to reiterate, it is not harm being directly done to the the shareholders. It is harm to the company. Shareholders get the right that
Just to reiterate, it is not harm being directly done to the the shareholders. It is harm to the company. Shareholders get the right that arises from their shareholdings and that is why it is derived from their shareholdings. And that is why it is called derivative action. What is critical is the statutory provisions under 165 is a gate keeping exercise. It is not a fun?/fine? Decision by the court. If all the court is doing is deciding under 165 should the shareholder be allowed to go further into the name and behalf of the company. If it stops there, they cant. If they say yes you ought to be able to go forward, then you have to sue the directors. It is not a single action. Really important to understand it is gatekeeping. So courts will look obviously at what is happening but it doest make a decision on the merits of the case. Again it is important point. Can we go further? Yes no is what s165 is about
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