Companies Act 2007 · As enacted · 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.
Official translationFrom Department of Government Printing, unchanged
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—
bring proceedings in the name and on behalf of the company or any subsidiary of that company; or
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.
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—
the likelihood of the proceedings succeeding;
the costs of the proceedings in relation to the relief likely to be obtained;
any action already taken by the company or subsidiary to obtain relief;
the interests of the company or subsidiary in the proceedings being commenced, continued, defended or discontinued, as the case may be.
Leave to bring proceedings or intervene in proceedings may be granted under subsection (1), only if the court is satisfied that either—
the company or subsidiary does not intend to bring, diligently continue, defend or discontinue the proceedings, as the case may be; or
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.
Notice of the application shall be served on the company or subsidiary as the case may be.
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.
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