Wallersteiner v Moir (No 2)

Wallersteiner v Moir (No 2) is a landmark English company law case, specifically known for its pronouncements on derivative actions and the reimbursement of costs incurred by a shareholder who successfully pursues such an action. This case established important principles regarding a shareholder's right to bring a claim on behalf of a company against its directors or other parties.

The case concerned an attempt by a shareholder, Mr. Moir, to recover funds allegedly misappropriated from two companies by Mr. Wallersteiner. Mr. Moir brought a derivative action, arguing that the companies themselves were unable or unwilling to pursue the claim.

A key aspect of the decision was the recognition that a shareholder who pursues a derivative action that benefits the company is entitled to be indemnified for their costs, even if the company itself did not authorize the action. This "Wallersteiner order" provides a mechanism for shareholders to be reimbursed for their expenses in bringing a successful derivative action, thereby encouraging shareholders to act in the best interests of the company, even when the directors fail to do so.

The principles established in Wallersteiner v Moir (No 2) are significant because they provide a framework for shareholder enforcement of directors' duties. The case helps ensure accountability and encourages good corporate governance by making it financially feasible for shareholders to pursue legal action on behalf of the company when appropriate.