Section 242 of The Companies Act No. 17 of 2015: Application for permission to continue derivative claim brought byanother member
(1) If a derivative claim—
(a) has been brought by a member of a company;
(b) was brought by a company and is continued by a member of the company as a derivative claim; or
(c) has been continued by a member of the company as a derivative claim, another member of the company may apply to the Court for permission to continue a derivative claim to which this section applies on the ground specified in subsection (2).
(2) The ground is that—
(a) the manner in which the proceedings have been commenced or continued by the claimant amounts to an abuse of the process of the Court;
(b) the claimant has failed to prosecute the claim diligently; and
(c) it is appropriate for the applicant to continue the claim as a derivative claim.
(3) If it appears to the Court that the application and the evidence providedby the applicant in support of it does not disclose a case for giving permission or leave, 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 on such terms as it considers appropriate;
(b) refuse permission and dismiss the application; and
(c) adjourn the proceedings on the application and give such directions as it considers appropriate.
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