Over Taylor Biggs

A shareholder can take proceedings in his/her own name for loss or damage suffered by the Company arising out of, amongst other things, a director’s breach of duty.  To prevent abuse of the process the Court has to approve the continuation of the claim once it has begun.

In a recent High Court case the Court concluded that the Company was deadlocked and had in effect also run its course. It was a prime candidate for being wound up under the just and equitable principle.  The Court further concluded a liquidator would be in a better position to deal with the disputes. It took the pragmatic view that cost and benefit of having separate derivative actions running alongside an extremely likely winding up of the Company did not warrant the actions being allowed to continue.  In light of the costs of derivative actions, those looking to bring such claims should look at all the options available before wasting time and money on derivative actions where there are clearly more pragmatic and cost effective solutions.

Case: Langley Ward Ltd v Trevor & Anor [2011] EWHC (Ch) (High Court)

This briefing note is not intended to be a comprehensive guide and does not cover every aspect of the topic and is not intended to provide legal or other advice.