Case No. CL-2019-000290

[2004] HKCFA 73, the Hong Kong Court of Final Appeal (the “CFA”) considered the distinction between derivative actions intended to compensate the company for wrongful acts by individual directors or shareholders and the equivalent of a s.994 petition, the purpose of which was to remedy the unfairly prejudicial conduct of the affairs of the company. The CFA held that the purpose of a s.994 petition was not to order the payment of damages or compensation by a shareholder. Lord Scott (with whom the other members of the CFA agreed) held (at [47]–[48] and [61]–[62]) that, although the court did not lack jurisdiction, in the strict sense, to make the orders sought against a director for breach of duty, a derivative action was the proper way in which to remedy such a breach. The essence of the decision was that, where the central claim was an action by the company to be compensated for a director’s breach, a minority shareholder should not use s.994 as a way of circumventing the rule in