• CHAPTER 1 CHAPTER 1 DERIVATIVE CLAIMS

    • 282. Derivative claims

      (1) This Chapter applies to proceedings by a member of a company—
      (a) in respect of a cause of action vested in the company, and
      (b) seeking relief on behalf of the company.
      This is referred to in this Chapter as a "derivative claim".
      (2) A derivative claim may only be brought—
      (a) under this Chapter, or
      (b) in pursuance of an order of the Court in proceedings under Part 28.
      (3) A derivative claim under this Chapter may be brought only by:
      (a) a member holding 5% or more of the share capital of the company, or
      (b) a member with the written consent of members holding together with the first mentioned member 5% or more of the share capital of the company
      (an "eligible member") in respect of a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company.

      The cause of action may be against the director or another person (or both).
      (4) It is immaterial whether the cause of action arose before or after the person seeking to bring or continue the derivative claim became an eligible member of the company.
      (5) For the purposes of this Chapter—
      (a) "director" includes a former director,
      (b) a shadow director is treated as a director, and
      (c) references to a member of a company include a person who is not a member but to whom shares in the company have been transferred or transmitted by operation of law.

    • 283. Application for permission to continue derivative claim

      (1) An eligible member of a company who brings a derivative claim under this Chapter must apply to the Court for permission to continue it.
      (2) If it appears to the Court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission, the Court—
      (a) must dismiss the application, and
      (b) may make any consequential order it considers appropriate.
      (3) If the application is not dismissed under subsection (2), the Court—
      (a) may give directions as to the evidence to be provided by the company, and
      (b) may adjourn the proceedings to enable the evidence to be obtained.
      (4) On hearing the application, the Court may—
      (a) give permission to continue the claim on such terms as it thinks fit,
      (b) refuse permission and dismiss the claim, or
      (c) adjourn the proceedings on the application and give such directions as it thinks fit.

    • 284. Application for permission to continue claim as a derivative claim

      (1) This section applies where—
      (a) a company has brought a claim, and
      (b) the cause of action on which the claim is based could be pursued as a derivative claim under this Chapter.
      (2) An eligible member of the company may apply to the Court for permission to continue the claim as a derivative claim on the ground that—
      (a) the manner in which the company commenced or continued the claim amounts to an abuse of the process of the Court,
      (b) the company has failed to prosecute the claim diligently, and
      (c) it is appropriate for the member to continue the claim as a derivative claim.
      (3) If it appears to the Court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission, the Court—
      (a) must dismiss the application, and
      (b) may make any consequential order it considers appropriate.
      (4) If the application is not dismissed under subsection (3), the Court—
      (a) may give directions as to the evidence to be provided by the company, and
      (b) may adjourn the proceedings to enable the evidence to be obtained.
      (5) On hearing the application, the Court may—
      (a) give permission to continue the claim as a derivative claim on such terms as it thinks fit,
      (b) refuse permission and dismiss the application, or
      (c) adjourn the proceedings on the application and give such directions as it thinks fit.

    • 285. Whether permission to be given

      (1) The following provisions have effect where a member of a company applies for permission under section 283 (application for permission to continue derivative claim) or 284 (application for permission to continue claim as a derivative claim).
      (2) Permission must be refused if the Court is satisfied—
      (a) that a person acting in accordance with section 162 (duty to promote the success of the company) would not seek to continue the claim, or
      (b) where the cause of action arises from an act or omission that is yet to occur, that the act or omission has been authorised by the company, or
      (c) where the cause of action arises from an act or omission that has already occurred, that the act or omission—
      (i) was authorised by the company before it occurred, or
      (ii) has been ratified by the company since it occurred.
      (3) In considering whether to give permission the Court must take into account, in particular—
      (a) whether the eligible member is acting in good faith in seeking to continue the claim,
      (b) the importance that a person acting in accordance with section 162 (duty to promote the success of the company) would attach to continuing it,
      (c) where the cause of action results from an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be—
      (i) authorised by the company before it occurs, or
      (ii) ratified by the company after it occurs,
      (d) where the cause of action arises from an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company,
      (e) whether the company has decided not to pursue the claim,
      (f) whether the act or omission in respect of which the claim is brought gives rise to a cause of action that the member could pursue in his own right rather than on behalf of the company.
      (4) In considering whether to give permission the Court shall have particular regard to any evidence before it as to the views of members of the company who have no personal interest, direct or indirect, in the matter.

    • 286. Application for permission to continue derivative claim brought by another eligible member

      (1) This section applies where an eligible member of a company ("the claimant")—
      (a) has brought a derivative claim,
      (b) has continued as a derivative claim a claim brought by the company, or
      (c) has continued a derivative claim under this section.
      (2) Another eligible member of the company ("the applicant") may apply to the Court for permission to continue the claim on the ground that—
      (a) the manner in which the proceedings have been commenced or continued by the claimant amounts to an abuse of the process of the Court,
      (b) the claimant has failed to prosecute the claim diligently, and
      (c) it is appropriate for the applicant to continue the claim as a derivative claim.
      (3) If it appears to the Court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission, the Court —
      (a) must dismiss the application, and
      (b) may make any consequential order it considers appropriate.
      (4) If the application is not dismissed under subsection (3), the Court—
      (a) may give directions as to the evidence to be provided by the company, and
      (b) may adjourn the proceedings to enable the evidence to be obtained.
      (5) On hearing the application, the Court may—
      (a) give permission to continue the claim on such terms as it thinks fit,
      (b) refuse permission and dismiss the application, or
      (c) adjourn the proceedings on the application and give such directions as it thinks fit.