This thesis of 98,273 words is concerned with one of company law's most thorny aspects: the derivative action. The thesis has both a positive and a normative dimension. It takes a position about the role that derivative action litigation should have in the corporate governance matrix. This is the realm of the normative, the domain of what some political philosophers call 'ideal theory'. However the analysis here aims not to be merely a philosophical flight of fantasy about how things ought to be, but rather aims to provide insight into current practice and to suggest substantive viable improvements. In view of this, this analysis can be used both to understand substantial and procedural rules governing the derivative action and judicial decisions in this area, and to suggest how problems should be resolved in the future, judicially and legislatively. First, the thesis attempts a fundamental rethink of the content of the derivative action and its objectives. It attempts to clarify the nature of the action and the circumstances in which its application may be deemed propitious. The thesis then focuses on and examines the conditions that may produce a positive inducement to litigate. It expresses a view on what might be the optimal level of such litigation with a view to enhancing the potential effectiveness of the action. Crucially, it strongly links the actual viability of derivative actions to funding mechanisms, namely developing adequate means to fund derivative actions so as to make them worthwhile financially. Finally, the thesis argues that it is vital to clarify the interaction between the primary remedies available to shareholders. More specifically, the thesis calls for action on three complementary levels, namely, conceptual the adoption of a new framework in the guise of the Functional and Focused Model ('FFM') to govern derivative action litigation; strategic the employment of appropriate incentives and fee rules which advance the premises behind the FFM; and, finally, maintaining doctrinal consistency - by clarifying the interaction between the derivative action and the unfair prejudice remedy.</p
