In response to the new shareholder derivative action right in the Companies Act 2006, the Courts Service has published draft rules setting out the procedure for bringing such claims.
The draft rules state that in order to bring a derivative claim, the claimant must file a claim form and application for permission to proceed with the claim, together with supporting evidence. It is also necessary for claimants to provide the company with a copy of this documentation as soon as reasonably practicable. If a claimant considers that notifying the company of the claim may frustrate the relief sought it can seek within its permission application an order allowing it to delay notifying the company.
The draft rules also envisage that as a condition of granting permission to bring a derivative claim, the court may order that the claim is not to be settled or discontinued without the court’s permission. This is to discourage the bringing of ‘greenmail’ claims where claimants purchase shares in a company and then bring a claim that is settled on terms that provide for the shares to be repurchased from the claimants at a higher price than market value.