Abstract:
The statutory derivative action was introduced to ameliorate the harshness of the conditions for commencing a common law derivative action. One statutory mechanism to balance that liberalisation was the requirement that a complainant first gives notice to the directors of the company before applying to the court for leave to bring a statutory derivative action on behalf of the company. However, it is uncertain what is required of the nature and specificity of content in the notice. The various governing statutes do not explicitly address this and the authorities do not speak with one voice. This article seeks to clarify the company law principles underlying, and the policy rationales, viz, economic efficiency and corporate governance and accountability, for, the notice requirement and attempts to rationalise the incoherent authorities, arguing that the authorities can be best reconciled on the basis that the courts are exercising judicial pragmatism in attempting to uphold the policy objectives of the notice requirement.