CORPORATIONS LAW- SECT 237 Applying for and granting leave
This legislation has been repealed.
CORPORATIONS LAW- SECT 237
Applying for and granting leave
- (1)
- A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings.
- (2)
- The Court must grant the application if it is satisfied that:
- (a)
- it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and
- (b)
- the applicant is acting in good faith; and
- (c)
- it is in the best interests of the company that the applicant be granted leave; and
- (d)
- if the applicant is applying for leave to bring proceedingsthere is a serious question to be tried; and
- (e)
- either:
- (i)
- at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or
- (ii)
- it is appropriate to grant leave even though subparagraph (i) is not satisfied.
- (3)
- A rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that:
- (a)
- the proceedings are:
- (i)
- by the company against a third party; or
- (ii)
- by a third party against the company; and
- (b)
- the company has decided:
- (i)
- not to bring the proceedings; or
- (ii)
- not to defend the proceedings; or
- (iii)
- to discontinue, settle or compromise the proceedings; and
- (c)
- all of the directors who participated in that decision:
- (i)
- acted in good faith for a proper purpose; and
- (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 they reasonably believed to be appropriate; and
- (iv)
- rationally believed that the decision was in the best interests of the company.
The director's belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold.
- (4)
- For the purposes of subsection (3):
- (a)
- a person is a third party if:
- (i)
- the company is a public company and the person is not a related party of the company; or
- (ii)
- the company is not a public company and the person would not be a related party of the company if the company were a public company; and
- (b)
- proceedings by or against the company include any appeal from a decision made in proceedings by or against the company.
- Note: Related party is
defined in section 228.