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2 this approach is similar to. The sca also questioned whether it is necessary. [3] woollam served the demand purporting thereby to exercise the right conferred in terms of s 165(2)(a) of the 2008 companies act
That provision entitles any shareholder or person entitled to be registered as a shareholder to ‘serve a demand upon a company to commence or continue legal proceedings, or take related steps, to protect the legal interests of the company’ For example, the sca did not agree with the court a quo's ruling that the discretion to be exercised by the court is limited by provisions of section 165 (5) Unlike the abovementioned jurisdictions, south africa’s section 165 derivative action shares a similarity with the us company law in allowing the board of a company the election to appoint an independent and impartial person to investigate the demand.
Section 165 of the act provides for any director or prescribed officer, shareholder, registered trade unions or any other person with leave of court, to serve a demand upon a company to commence or continue legal proceedings, or take related steps, to protect the legal interests of the company.
Derivative actions (1)any right at common law of a person other than a company to bring or prosecute any legal proceedings on behalf of that company is abolished, and the rights in this section are in substitution for any such abolished right. Abstract section 165 of the companies act 71 of 2008 provides that applicants with locus standi who are aware of a wrong perpetrated against the company and who wish to pursue a derivative action against the company must have served a demand on the company requiring it to commence or continue legal proceedings to protect its own legal interests. This article focuses on part of the legal grounds listed in section 165(5)(b) upon which a court may grant leave to bring or continue proceedings on behalf of the company. In kukama v lobe1022 at para 27 the court stated that granted leave to institute [421
Legal proceedings [in terms ifs 162]. Without making the demand contemplated in section 165 of act 71 of 2008 in the name and on behalf of the company. Then if the company fails to take such actions or serve a notice declining to comply with the demand The person that made the demand can apply to the court for leave to bring or continue with the proceedings in the name and on behalf of the company (hofmayer 2021).
Section 165 of the companies act 71 of 2008 introduces the new statutory derivative action
The section confers a pivotal function on the courts as gatekeepers to the derivative action, with an important filtering or screening function to weed out applications for derivative actions that are frivolous, vexatious or without merit The vital judicial discretion to grant leave to an applicant to. The information contained in these documents is critical in order to prove wrongful conduct Section 165 (14) of the companies act 71 of 2008 provides that the court is the final authority on whether to grant leave to institute proceedings
Ratification is merely a factor for the court to consider. The recent supreme court of appeal (sca) judgment in lazarus mbethe v united manganese of kalahari raises jurisprudential questions regarding statutory derivative actions in south africa
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