Friday 13 February 2009

UK: Scotland: leave granted for petitioner to bring derivative proceedings

Lord Glennie, sitting in the Outer House of the Court of Session, has granted leave under Section 266 of the Companies Act (2006) for derivative proceedings to be brought: see Wishart, for an order under s.266 of the Companies Act (2006) [2009] CSOH 20. His Lordship's decision is the first reported in Scotland to consider the substantive issues and procedural difficulties associated with the new derivative proceedings regime introduced by the 2006 Act. Lord Glennie also considered the concept of good faith within Section 268(2)(a) and rejected the argument that the Scottish courts were unable to order that the company should pay the petitioner's legal expenses in derivative proceedings.

Note: Chapter 1, Part 11, of the Companies Act (2006), sets out the framework for the bringing of a derivative action in England and Wales or Northern Ireland. For discussion, see: Mission Capital Plc v. Sinclair [2008] EWHC 1339 and Franbar Holdings Ltd v Patel [2008] EWHC 1534 (Ch). Leave was not given to continue proceedings in either of these cases. 

Update (21 July 2009): the Court of Session, Inner House, has given its opinion in the appeal from the Lord Ordinary's decision in Wishart: see here for further information.

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