Research Handbook on Representative Shareholder Litigation
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Research Handbook on Representative Shareholder Litigation

Edited by Sean Griffith, Jessica Erickson, David H. Webber and Verity Winship

Written by leading scholars and judges in the field, the Research Handbook on Representative Shareholder Litigation is a modern-day survey of the state of shareholder litigation. Its chapters cover securities class actions, merger litigation, derivative suits, and appraisal litigation, as well as other forms of shareholder litigation. Through in-depth analysis of these different forms of litigation, the book explores the agency costs inherent in representative litigation, the challenges of multijurisdictional litigation and disclosure-only settlements, and the rise of institutional investors. It explores how related issues are addressed across the globe, with examinations of shareholder litigation in the United States, Canada, the United Kingdom, the European Union, Israel, and China. This Research Handbook will be an invaluable resource on this important topic for scholars, practitioners, judges and legislators.
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Chapter 11: Limiting litigation through corporate governance documents

Ann M. Lipton

Abstract

In response to a perceived increase in the amount of frivolous stockholder litigation, corporations have begun to insert provisions in their corporate governance documents that restrict shareholders’ ability to pursue private litigation. This chapter sheds light on how these limitations, such as forum selection clauses, arbitration clauses, feeshifting agreements, and minimum stake requirements, could be abused. The chapter begins with the historical evolution of these provisions and the shifting legal justifications for them. The chapter then explores some policy concerns regarding these limitations, including the scope of the limitations, the enforceability of such limitations, and, more broadly, the theoretical inquiry as to whether such limitations are appropriate for inclusion in corporate governance documents in the first instance. The author concludes that the answer can shift one way or another depending on whether one views the function of shareholder litigation as providing for compensation or deterrence.

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