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Companies Act 2006

Section 262: Application for permission to continue claim as a derivative claim

496.This section addresses the possibility that, where a company has brought a claim and the cause of action on which the claim is based could be pursued by a member as a derivative action:

  • the manner in which the company commenced or continued the claim may amount to an abuse of process (e.g. the company brought the claim with a view to preventing a member bringing a derivative claim);

  • the company may fail to prosecute the claim diligently; and

  • it may be appropriate for a member to continue the claim as a derivative claim;

497.The section provides that, in these circumstances, a member may apply to the court to continue the claim as a derivative action.

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