LAWS4112 Study Guide - Final Guide: Fide, Ultra Vires, Lexus Gs
Document Summary
A statutory derivative action is where a member brings an action on behalf of the company. Therefore, any compensation goes back to the company, not the shareholder who brings the action. S198a management confers power to commence proceedings in the company name. S237(1) members are required to seek leave o s236 a member, former member, officer or former officer (director, shareholder, officer or former) may bring proceedings if granted leave. An action cannot be brought when the company is in liquidation (chawan v. S237(2) leave will be granted if: probability that the company will not take action. The applicant must show that they asked the company to bring proceedings and the company declined. Where the alleged wrongdoer controls the majority: good faith. In swanson v pratt palmer j held that good faith involves two interrelated factors: 1. That the applicant honestly believes that a good cause of action exists and has a reasonable prospect of success and: 2.
