Corporations Act 2001

CHAPTER 2F - MEMBERS' RIGHTS AND REMEDIES  

PART 2F.1A - PROCEEDINGS ON BEHALF OF A COMPANY BY MEMBERS AND OTHERS  

SECTION 237   APPLYING FOR AND GRANTING LEAVE  

237(1)   [ Seeking leave to proceed or intervene]  

A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings.

237(2)   [ Criteria for leave]  

The Court must grant the application if it is satisfied that:


(a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and


(b) the applicant is acting in good faith; and


(c) it is in the best interests of the company that the applicant be granted leave; and


(d) if the applicant is applying for leave to bring proceedings - there is a serious question to be tried; and


(e) either:


(i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or

(ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied.

237(3)   [ Presumption]  

A rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that:


(a) the proceedings are:


(i) by the company against a third party; or

(ii) by a third party against the company; and


(b) the company has decided:


(i) not to bring the proceedings; or

(ii) not to defend the proceedings; or

(iii) to discontinue, settle or compromise the proceedings; and


(c) all of the directors who participated in that decision:


(i) acted in good faith for a proper purpose; and

(ii) did not have a material personal interest in the decision; and

(iii) informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and

(iv) rationally believed that the decision was in the best interests of the company.

The director's belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold.

237(4)   [ Interpretation]  

For the purposes of subsection (3):


(a) a person is a third party if:


(i) the company is a public company and the person is not a related party of the company; or

(ii) the company is not a public company and the person would not be a related party of the company if the company were a public company; and


(b) proceedings by or against the company include any appeal from a decision made in proceedings by or against the company.

Note: Related party is defined in section 228.


 

Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.