Control of the company o b applicant is acting in

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control of the company o (b) applicant is acting in good faith o (c) it is in the best interests of the company that the applicant be granted leave o (d) If the applicant is applying for leave to bring proceedings rather than intervene, there is a serious question to be tried and o (e) Either: (i) at least 14 days before making the application the applicant gave written notice to the company of its intention to apply for leave and the reasons for applying; or (ii) it is appropriate to grant leave even thought (i) is not satisfied 3
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Shareholder Remedies These are the requirements for bringing a SDA and we will now consider particular ones C.4 Inaction by the Company {s 237(1)(a) Corporations Act} This requirement relates to the final requirement of notice to the company “The company’s response to any notice of intention to apply for a grant of leave would provide evidence relevant to this criterion” {Explanatory Memorandum to the CLERP Bill 1998 (Cth)} You can also use the fact that the alleged wrongdoer has influence over the board as evidence of the company’s inaction C.5 Applicant’s Good Faith {s 237(1)(b) Corporations Act} In {Swansson, Palmer J} held that good faith involves at least two interrelated factors: o (1) applicant honestly believes that a good cause of action exists and has reasonable prospect of success o (2) applicant is seeking derivative action for a collateral purpose which would amount to abuse Additionally in {Swansson, Palmer J} noted that the fact that standing is given to former members and officers suggest that it is possible to be acting in good faith even where the applicant has no financial interest in the company A more liberal approach was taken in {Charlton v Baber per Barrett J} where His Honour held that the fact that the applicant was unlikely to benefit financially from successful action was irrelevant to his bona fides o “he may have motives that go beyond mere personal gain. As a former director, he may feel a sense of responsibility to creditors who have suffered losses. Such an attitude would be entirely consistent with the exercise of good faith” {Charlton per Barrett J} C.6 Best Interests of the Company {s 237(1)(c) Corporations Act} This criterion recognises that “ a company might have sound business reasons for not pursuing a cause of action open to it and that its management might legitimately have decided that the best interests of the company would be served by not taking action” {Explanatory Memorandum to CLERP 1998 Bill} Generally if a company is solvent its best interests will be those of its shareholders {Ngurli; Parke} Many cases have concerned companies in liquidation or financial difficulty and in this context it has been held that “best interests” is the predominantly the interests of the creditors {Charlton v Baber; Walker} (1) Likely Considerations Generally the court will have regard to: o The effect of litigation on the purpose for which the company was established o
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