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Companies Act 2006

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This is the original version (as it was originally enacted).

268Granting of leave

This section has no associated Explanatory Notes

(1)The court must refuse leave to raise derivative proceedings or an application under section 267 if satisfied—

(a)that a person acting in accordance with section 172 (duty to promote the success of the company) would not seek to raise or continue the proceedings (as the case may be), or

(b)where the cause of action is 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 is 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.

(2)In considering whether to grant leave to raise derivative proceedings or an application under section 267, the court must take into account, in particular—

(a)whether the member is acting in good faith in seeking to raise or continue the proceedings (as the case may be),

(b)the importance that a person acting in accordance with section 172 (duty to promote the success of the company) would attach to raising or continuing them (as the case may be),

(c)where the cause of action is 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 is 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 raise proceedings in respect of the same cause of action or to persist in the proceedings (as the case may be),

(f)whether the cause of action is one which the member could pursue in his own right rather than on behalf of the company.

(3)In considering whether to grant leave to raise derivative proceedings or an application under section 267, 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.

(4)The Secretary of State may by regulations—

(a)amend subsection (1) so as to alter or add to the circumstances in which leave or an application is to be refused,

(b)amend subsection (2) so as to alter or add to the matters that the court is required to take into account in considering whether to grant leave or an application.

(5)Before making any such regulations the Secretary of State shall consult such persons as he considers appropriate.

(6)Regulations under this section are subject to affirmative resolution procedure.

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