The position of minority shareholders 311because otherwise directors in breach of duty might cause the company to bring a
claim with the intention that the claim could later be abandoned or deliberately made
unsuccessful.
The court mustrefuse permission to continue a derivative claim brought in respect of a
director’s breach of duty in two circumstances:
n if a person acting in accordance with section 172 (duty to promote the success of the
company) would not seek to continue the claim; or
n the members of the company have voted to authorise or ratify the act or omission
complained of.
Section 263(3) lists six matters which the court should take into account in particularin
considering whether to give permission to continue a derivative claim brought in respect of
a director’s breach of duty. These matters are:
n whether the member is acting in good faith in seeking to continue the claim;
n the importance that a person acting in accordance with s. 172 (the duty to promote the
success of the company) would attach to continuing the claim;
n 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, either author-
ised by the company before it occurs or ratified by the company after it has occurred;
n 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;
n whether the company has decided not to pursue the claim; and
n 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.
Section 263(4) provides that the court should have particular regard to the views of
members of the company who have no personal interest, direct or indirect, in the matter.
Section 264 allows a second member to continue a derivative claim originally brought by
another member.
Section 994 of the Companies Act 2006
Any member may petition the court on the grounds that the affairs of the company are
being, or have been, or will be, conducted in a manner which is unfairly prejudicial to the
members generally or to particular members.
If the court agrees that the conduct is unfairly prejudicial it can make any order it sees fit.
In particular it may:
(a) Order the company to behave in a certain way in the future.
(b) Require the company to do or not to do certain acts.
(c) Authorise a person to sue in the company name on behalf of the company.
(d) Order the company not to alter its articles without the court’s permission.
(e) Order the company, or certain members of the company, to buy the shares of any
members.