Theoretical Elaboration of Applicable Standards of Double Derivative Suits
Double derivative suits refer to the situation where the shareholders in the parent com-pany file an appeal to the court to investigate the wrongdoer's responsibility in their own name when the wholly-owned subsidiary suffers damage and the parent company and the subsidiary both refuse to file a suit.Provision 4 of Article 189 in the Company Law establishes the applica-ble standards of double derivative suits on the basis of single derivative suits.Shareholders of the parent company not only need to meet the legal shareholding conditions when suing,but also need to have the status of shareholders of the parent company when the alleged wrongdoing occurs and the litigation is in process.Any subject that a wholly-owned subsidiary has the right to sue can be a defendant in a double derivative suit,but when the directors,supervisors or of-ficers of the parent company infringe on the interests of the wholly-owned subsidiary,the share-holder of the parent company can choose to file a single derivative suit or a double derivative suit.When a wholly-owned subsidiary does not have a board of directors or a board of supervisors,the shareholder of the parent company can file a request to the director,supervisor or audit commit-tee who performs the corresponding functions.
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