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The effect of litigation on the purpose for which the

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The effect of litigation on the purpose for which the company was established o The effects of litigation on the company’s business o Whether there are any other means of redressing the harm claimed by the applicant o If there is any evidence of the defendant’s ability to meet any judgment in favour of the Company (2) Note Presumption for Proceedings Against Not Related Parties Under {s 237(4) Corporations Act} there is a rebuttable presumption that granting leave is NOT in the best interests of the company if it is established that: o (a) the proceedings are: (i) by the company against a third party; or (ii) by a third party against the company; and o (b) the company has decided (i) not to bring proceedings; or (ii) not to defend the proceedings; or (iii) to discontinue, settle or compromise the proceedings; and o (c) all of the directors who participated in that decision (i) acted in good faith for a proper purpose (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 that they reasonably believed to be appropriate; and (iv) rationally believed that the decision was in best interests of the company Further to this under {s 237(4) Corporations Act} defines a person as a third party it: o (a) the company is a public company and the person is not a related party of the company as defined in s 288 o (b) the company is not a public company and the person would not be a related party to the company if the company were public This presumption only applies to third parties being involved in the proceedings o Current directors are related parties but former directors (> 6 months {s 228(5)} ) and other officers and employees are NOT related parties {s 228(2)} This presumption recognises that if a claim is NOT against one of the directors the directors will generally be in a better place than a court to determine whether to bring action o However by using the term “related party” it opens up the possibility of directors who have been out of office for > 6months will be third parties and these presumptions would apply for proceedings brought against them C.7 Serious Question to be Tried {s 237(d) Corporations Act} This requirement does not mean the applicant has to prove the substantive issues (for example that the director has breached a duty) The applicant is only required to show that proceedings should be commenced – designed to prevent frivolous claims {Explanatory 4
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Shareholder Remedies Memorandum to CLERP 1998 Bill} C.8 Notice of Proceedings to the Company Criterion is meant to allow the company time to address the applicant’s concerns prior to the court hearing the matter Failure by the company to take action may support the court arriving at the conclusion that the company probably would not itself take proceedings {Explanatory Memorandum to CLERP 1998 Bill} C.9 Effect of Ratification by Members Under {s 239(1) Corporations Act} if the members of a company ratify or approve conduct, the ratification or approval
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The effect of litigation on the purpose for which the...

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