Question

When is it appropriate to bring a statutory derivative action (s 236)? Draw a flowchart for the steps to be followed in an application for oppression by a minority shareholder. What are other personal rights conferred on members by the Corporations Act?(300 words)

Answer 1

Derivative action allows members or officers to bring a proceeding on behalf of the company or intervene anaction. Parties should bring a statutory derivative action ( s 236) when there is an oppression to the interest ofparties

Flowchart:

1.Step 1: A party is entitled to take statutory derivative actions2.

Step 2: The party have leave of the court and carry on proceedings or intervene in existingproceedings of a company3

Step 3: The court either make provisional orders, provide guides to the conduct of proceedings orrequire the company to do or abstain from doing somethingOther personal rights for members conferred by the Corporations Act:

The ability of members to inspect the books: When a member assumes there is something oppressivein the company's a, the member has a right to check out the company's book on condition that theaction of inspection is truth and associated with the statutory derivative action.

Correction of the members’ register: A member has rights to require a correction of registers from thecourt.

A right to challenge decisions which affect members’ special rights: When there is a decision thataffects rights of more than 10% members, members are entitled to require the rescind of the decision.

Injunctions: Members can apply for assistance from the court if there is a substantial infringementincurred by the contravention of Corporations Act

Oppressive or unfair conduct: Members have right to take actions against their company if theconduct of the affairs of the company contradict with the interest of members