Legal Translation, Derivative Lawsuits and Foreign Corporate Governance

We’ve blogged about legal language translation services in the context of foreign direct investments, the need for accurate corporate translation of share pledge agreements, and multilingual legal translations of multinational corporate governance documents. By definition, derivative lawsuits are suits brought by aggrieved shareholders in the name of the corporation to remedy corporate governance failures. If one prevails in the derivative lawsuit, the winnings are returned to the firm for the direct benefit of all shareholders involved. In the United States, derivative lawsuits as a whole have not been much of a success. However, when placed in the international arena, new issues arise – particularly in a rapidly globalizing world.


Perhaps somewhat surprisingly, derivative lawsuits have become an important tool for corporate governance in foreign systems. Historically, derivative lawsuits were viewed as special to the United States, due in large part to the American system’s favorable discovery rules. But over the past decade such countries as Japan and Italy have liberalized their codes to promote corporate governance, thus turning heavily towards the derivative lawsuit.

When filing a derivative lawsuit in a foreign country, it is essential that one obtain a foreign language translation of the corporate code – not only to understand whether or not such a lawsuit will be of benefit in that jurisdiction, but also to ensure all proper steps for filing are followed.

Up Next: Legal Translation, Foreign Language Premarital Agreements, and Full Faith and Credit Clause

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