Section 346 CAMA 2020

Section 346 Companies and Allied Matters Act is about Commencing derivative action. It is under Chapter 13 (Protection of minority against illegal and oppressive conduct action by or against the company) of the Act.

(1) Subject to the provisions of subsection (2), an applicant may apply to the Court for leave to bring an action in the name or on behalf of a company or a company’s subsidiary, or to intervene in an action to which the company or the company’s subsidiary is a party, for the purpose of prosecuting,defending or discontinuing the action on behalf of the company or the company’s subsidiary.

(2) No action may be brought and no intervention may be made under subsection (1), unless the Court is satisfied that—

(a) a cause of action has arisen from an actual or proposed act or omission involving negligence, default, breach of duty or trust by a director or a former director of the company ;

(b) the applicant has given reasonable notice to the directors of the company of his intention to apply to the Court under subsection (1) ;

(c) the directors of the company do not bring, diligently prosecute, defendor discontinue the action ;

(d) the notice contains a factual basis for the claim and the actual or potential damage caused to the company ;

(e) the applicant is acting in good faith ; and

(f ) it appears to be in the best interest of the company that the action be brought, prosecuted, defended or discontinued.

(3) An action under this section may be against the director or any other person (or both).

(4) In any action referred to in this section the plaintiff shall have the right to obtain any relevant documents from the defendant and the witnesses at trial, and may in pursuance of that right request categories of documents from such person without identifying specific documents.