Plain language law

New Zealand law explained for everyone

Companies Act 1993

Enforcement - Derivative actions

166: Costs of derivative action to be met by company

You could also call this:

“Company may have to pay costs for shareholder or director's legal action on its behalf”

If you’re a shareholder or director who got permission to start or join a legal action on behalf of the company, you can ask the court to make the company pay for some or all of the costs. These costs might include things like lawyer fees and other expenses related to the case. This includes any costs that come from settling the case or stopping it early.

The court will usually tell the company to pay these costs. But if the court thinks it wouldn’t be fair for the company to pay, they might decide not to make the company pay.

Remember, you need to have gotten special permission first, as mentioned in section 165. Also, if you want to settle or stop the case, you need to follow the rules in section 168.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320826.

Topics:
Business > Industry rules
Business > Fair trading
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165: Derivative actions, or

“Court permission for shareholders or directors to act on behalf of a company in legal matters”

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167: Powers of court where leave granted, or

“Court's powers when allowing legal action about a company”

Part 9 Enforcement
Derivative actions

166Costs of derivative action to be met by company

  1. The court shall, on the application of the shareholder or director to whom leave was granted under section 165 to bring or intervene in the proceedings, order that the whole or part of the reasonable costs of bringing or intervening in the proceedings, including any costs relating to any settlement, compromise, or discontinuance approved under section 168, must be met by the company unless the court considers that it would be unjust or inequitable for the company to bear those costs.