The Challenges of Shareholder's Agency Demanding Derivative Claim in Iran's Law (Comparative Study)

In derivative claim, shareholders on behalf of the company and on its name bring an action against a director and managing director who have damaged the company by their acts. In principal_agent relationship, it is an obvious necessity to predict suitable mechanisms to dissolve their conflict of interests. Shareholder’s agency against director is sometimes faced with challenges that make it difficult to perform the rights of the company. In Iran’s law, the agent needs not to possess legal information or to litigate by a lawyer; this may cause the company to lose the case. Moreover, if the company or a shareholder files a suit against negligent director or managing director and does not appropriately prosecute it, the other shareholders can not prosecute it as a derivative action. So the negligent director may conspire with other directors or some shareholders so that they start an action against them and by not adequately defending the rights of the company, bring about its conviction; consequently, by virtue of res judicata rule, litigating against the company will frustrate in the future, and derivative claim would be a device of abuse and offender’s avoidance from liability. In English law, in the same situation, the shareholder or other shareholders are permitted to proceed the litigation brought by the company or one of the shareholders as a derivative suit, and therefore, the abuse of derivative action for damaging the company will be diluted.