Introduction The derivative action does exist both in civil and common law jurisdictions though named with disparity, that is derivative a suit (United States), Aktionarsklage (Germany) Oes exist both in civil and common law jurisdictions though and PaiSheng susong (PRC). When rights of the company are damaged by its own directors or senior managers while the company refuse to sue those directors or managers in the name of the company. The basic position in English law is that the court will not intervene in the application of shareholder derivative actions. In Germany, it was not until 2005, Law for Corporate Integrity and the Reform of Shareholder actions that introduced derivative action into company law (German Law on Stock Corporations), and unlike the United Kingdom and the United States, universal banks have long been strong. They run mutual funds and investment banks, and their representatives sit on company boards. The Chinese shareholder derivative action mechanism was framed by the Company Law and the CSRC's regulations which, at the same time, aimed to keep a balance between protecting shareholders and preventing strike actions. The statutes merely built a rough legal framework of shareholder derivative action in China, many vital aspects were missing, and this mechanism still should be explained and clarified. The company's independent right to sue is the basis of a derivative action. The meaning of derivative is that the shareholder brings an action on behalf of the company and claims in the interest of the company. The plaintiff, de facto, is the company, meaning the recovery from the action shall be attribute to the company rather than the shareholder. The initiation of a derivative action is restricted to certain situations where the company has itself refused or failed to take measures, such as, the Chinese Company Law stipulates where any director, senior management person, controlling shareholders or even third parties of a company violates laws, administrative regulations or even the company's articles of association during the performance of duties, he/she shall be liable for compensation if any damage is done to the company. Meanwhile, the shareholder is obliged to either require a demand on the relevant authorized organ to take over the action or show that such a demand has been futile. The shareholder derivative action has been deeming to be a controversial and thorny mechanism. Practical experience and empirical studies have led courts and commentators to conclude that in the United States, shareholder litigation were more likely to be abused as strike suits' for their mere nuisance and settlement value than other fields of civil litigation. Stephen M. Bainbridge argues that derivative action have few positive effects but imposes costly restriction to the managerial rights.5 The compensation that the company acquired from the derivative action were not enough to cover the damages it suffered. Tim Oliver Brandi held that it might be unnecessary to abolish the derivative suit if aspects of procedural law that create incentives for litigation abuse are reformed. Alan J. Meese noticed that some principal-agent theorists have suggested that derivative suits be abolished. The debate upon the shareholder derivative action with regard to its value and indispensableness is still continuing. It was long been perceived as a remedy for minority shareholders and remains to be discussed in-depth in recent economic circumstances. The separation between ownership and managerial rights of modern listed companies or multi-national companies gives rise to far-reaching missions to derivative litigation supporting sustainable development of the world economy. In essence, the derivative action mechanism is a delicate balance between shareholders and managerial authority in the economic background that separation between Ownership and managerial rights. The increasing complexity of business and financial transactions and the judiciary's attempts to handle these problems demonstrate the inadequacy of traditional theories of fiduciary obligation as measures of majority shareholder responsibility owed to the minority. The first part endeavors to reveal an overview on the derivative action. The second part aims to explain the jurisprudence of which the derivative action is rooted in. Some vital aspects of jurisprudence with regard to derivative action will be properly discussed, for instance: the theory of corporate legal personality; corporate governance; business judgement rule; the institutional function. The separation between ownership and managerial rights is a hallmark in the evolution of corporate law which justify the imperative of derivative action. In the third part, by exploring the legal history, inter alia, the origin and the statutory legislation on derivative action attempt to render a clearer perspective to this mechanism in a contextual review. Along with comparative analyses of the United Kingdom, the United States, and China, this exploration may serve feasible inspiration for future application or reform of derivative action which will make this mechanism practicable in a more effective manner