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Derivative action claims - Coggle Diagram
Derivative action claims
The Act introduced a derivative action procedure making it easier for members to sue directors or others for a broader range of acts or omissions than was previously possible under common law
Due to the different legal systems in England, Wales, Northern Ireland and Scotland, the legislation is split. The provisions themselves are intended to have the same effect in all territories
A derivative action is an action made by a member, on behalf of and in the name of the company and for the benefit of the company
Any member may on behalf of the company bring a derivative action claim against a director or third party for an actual or proposed act or omission involving negligence, breach of duty or breach of trust CA2206 (22. 260-69)
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Alternative remedy
There is an additional shareholder remedy that may be more suited to a members circumstances than an unfair prejudice petition or a derivative action and that is a petition for Justin and equitable winding up
A just and equitable winding up is a bespoke petition to wind up a company under IA 1986 This type of winding up is used in circumstances where a shareholder dispute has caused a breakdown in mutual trust and confidence and is impeding the management of the company.
The petition to wind up a company on a just and equitable basis may be made by the company, the directors, a majority of creditors, members or other persons liable to contribute to the assets of the company on a winding up
This type of action might be used in situations of 50:50 deadlock between members, mismanagement by one party or exclusion form management of a party