Skip to content
As enacted
Contents

Part VII · Management and Administration Registered Office

234. Derivative actions

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

Subject to the provisions of subsections (3)

and (4) of this section, the court may, on the application of a shareholder or director of a company, grant leave to that shareholder or director to—

(a)

bring proceedings in the name and on behalf of the company or any subsidiary of that company; or

(b)

intervene in proceedings to which the company or any subsidiary is a party, for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or subsidiary, as the case may be.

(2)

Without limiting the powers given to a court under subsection (1), in determining whether to grant or not grant leave under that subsection, the court shall have regard to—

(a)

the likelihood of the proceedings succeeding;

(b)

the costs of the proceedings in relation to the relief likely to be obtained;

(c)

any action already taken by the company or subsidiary to obtain relief;

(d)

the interests of the company or subsidiary in the proceedings being commenced, continued, defended or discontinued, as the case may be.

(3)

Leave to bring proceedings or intervene in proceedings may be granted under subsection (1), only if the court is satisfied that either—

(a)

the company or subsidiary does not intend to bring, diligently continue, defend or discontinue the proceedings, as the case may be; or

(b)

it is in the interests of the company or subsidiary, that the conduct of the proceedings should not be left to the directors or to the determination of the shareholders as a whole.

(4)

Notice of the application shall be served on the company or subsidiary as the case may be.

(5)

The company or subsidiary may appear and be heard and shall inform the court whether or not it intends to bring, continue, defend, or discontinue the proceedings, as the case may be.

(6)

Except as provided for in this section, a shareholder or director of a company is not entitled to bring or intervene in any proceedings in the name of or on behalf of the company or a subsidiary of the company.

Part VIII

Amalgamations

Part IX

Compromises with Creditors

Part X

Approval of Arrangements, Amalgamations, and Compromises by Court

Part XI

Provisions Relating to Offshore Companies

Part XII

Winding Up

Part XIII

Administrators Appointment of Administrator

Part XIV

Floating Charges

Part XV

Receivers and Managers

Part XVI

Registrar-General of Companies and Registration Appointment of Officers

Part XVII

Application of Act to Existing Companies

Part XVIII

Overseas Companies

Part XIX

Advisory Commission

Part XX

Companies Disputes Board

Part XXI

Offences Miscellaneous Offences

Part XXII

Miscellaneous Prohibition of Partnership with More Than Twenty Members

Part XXIII

Repeals and Amendments

Schedules