The Derivative Action in the Companies Act 1993
If a company suffers a wrong then prima facie it is the company that should seek redress for that wrong. In most cases it is the majority of either the board of directors or the company in general meeting that acts as the company in making the decision as to whether it will commence or otherwise become involved in legal proceedings. There is good reason for this. It avoids the multiplicity of actions that would arise if individual shareholders or directors could take action in a company's name - some of which would likely be actions designed to harass, with the ulterior aim or achieving a personal benefit for the initiator, rather than to compensate the company. The derivative action in the Companies Act 1993 creates an exception. It confers standing on a single director or shareholder of a company to seek the leave of the High Court to bring proceedings in the name of or on behalf of a company or related company, or, to intervene in proceedings to which the company or related company is a party.