The Shareholder's Standing to Challenge the Exercise of Directorial Power: Tianrui (International) Holding Company Ltd v China Shanshui Cement Group Ltd

An enduring problem with the proper purposes duty is the apparent right of the shareholder to enforce the same despite the duty being owed to the company. The cases on the proper purpose duty have thus far simply assumed the right of the shareholder to do so without dealing with the question of standing. In Tianrui (International) Holding Company Ltd v China Shanshui Cement Group Ltd , the Privy Council dealt with this issue directly and affirmed the shareholder's right to bring the action on the basis of the statutory contract constituted by the memorandum and articles of association of the company. The decision, whilst an appeal from the Cayman Islands, has important implications for shareholder rights as well as how directors’ duties are viewed in the UK and common law jurisdictions generally.