Section 240 of The Companies Act No. 17 of 2015: Application to Court for permission to continue claim as a derivative claim: how disposed of
(1) If—
(a) a company has brought a claim; and
(b) the cause of action on which the claim is based could be pursued as a derivative claim under this Part, a member of the company may apply to the Court for permission to continue the claim as a derivative claim on the ground specified in subsection (2).
(2) The ground is that—
(a) the manner in which the company commenced or continued the claim amounts to an abuse of the process of the Court;
(b) the company has failed to prosecute the claim diligently; and
(c) it is appropriate for the member to continue the claim as a derivative claim.
(3) If satisfied that the application and the evidence adduced by the applicant in support of it do not disclose a case for giving permission, the Court—
(a) shall dismiss the application; and
(b) may make any consequential order that it considers appropriate.
(4) If the application is not dismissed under subsection (3), the Court—
(a) may give directions as to the evidence to be provided by the company; and
(b) may adjourn the proceedings to enable the evidence to be obtained.
(5) On hearing the application, the Court may—
(a) give permission to continue the claim as a derivative claim on such terms as it considers appropriate;
(b) refuse permission and dismiss the application; or
(c) adjourn the proceedings on the application and give such directions as it considers appropriate.
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