Protection of the interests of a company through derivative action under Lesotho companies act 18 of 2011

Abstract

Contemporary corporate governance advocates for enhanced protection of the interests of a company against the wrongs perpetrated by both the outsiders and by those who control or manage a company. This is pivotal as it encourages investment and facilitates economic growth. Board of directors are, amongst other duties, entrusted with a duty to litigate against the wrongs committed against the company. The common law allows minority shareholders to bring derivative action on behalf of and to recover remedies for a company where wrongs are committed by the those who manage its business affairs. Lesotho, like other jurisdictions, has recently adopted a statutory derivative action. This research report identifies a number of flaws in the Lesotho statutory derivative action and draws significant lessons from similar action in South African and Australian legislation. The report makes recommendations on how the Lesotho statutory derivative action could be improved to enhance the protection of the interests of the company in the contemporary corporate setup. I