Understanding Derivative Actions

Summary

A derivative action is a lawsuit initiated by a shareholder on behalf of a corporation, typically against its executives or directors, when the corporation fails to act on its own. In Malaysia, such actions are governed by Section 347 of the Companies Act 2016. Shareholders must demonstrate that the action is in the corporations best interest and that they are acting in good faith. Notable cases like Khoo Soo Seong v. Khoo Teng Hock [2003] 2 MLJ 265 highlight procedural requirements. Alternative Dispute Resolution (ADR) methods in Malaysia include mediation, arbitration, conciliation, negotiation, and adjudication, each with distinct roles and goals. Adjudication, particularly in construction, is governed by the Construction Industry Payment and Adjudication Act 2012 (CIPAA).

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no, but i want to get to know more about derivative action and any case laws and principles to understand it better

Sure, I can provide some general information on derivative actions in Malaysia, including Selangor. Here are some key points and case laws:

Key Points:
- Definition: A derivative action is initiated by a shareholder on behalf of the corporation to seek redress for wrongs done to the corporation.
- Legal Basis: Governed under the Companies Act * in Malaysia.
- Conditions: Shareholders must show that the corporation has failed to take action and that the action is in the best interest of the corporation.

Notable Case Laws:
- Khoo Soo Seong v. Khoo Teng Hock [*] * MLJ *: Discusses the requirements and procedural aspects of derivative actions.
- Seet Li Lin v. Chew Chuan Yong [*] * MLJ *: Examines the fiduciary duties of directors and the circumstances under which a derivative action can be brought.
Would you like more detailed information on any specific aspect?

which section to refer about derivative action in companies act * in malaysia

In the Companies Act * of Malaysia, derivative actions are covered under Section *. This section outlines the procedure and requirements for a shareholder to bring a derivative action on behalf of the company.
Would you like more detailed information on the requirements or any related case laws?

yes

To bring a derivative action under Section * of the Companies Act *, here are the requirements:
- Application: Shareholder must apply to the court for permission.
- Notice: Written notice must be given to the company.
- Good Faith: Action must be in good faith.
- Best Interests: Action must be in the best interests of the company.

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Would you like more information on the procedural steps or requirements for the application?

what it is about in Khoo Soo Seong v. Khoo Teng Hock [*] * MLJ *

The case Khoo Soo Seong v. Khoo Teng Hock [*] * MLJ * revolves around the procedural requirements for bringing a derivative action. Specifically, it discusses:
- The necessity of demonstrating that the company has failed to take appropriate action.
- The importance of acting in good faith and in the best interests of the company.
- Procedural steps and the court's role in granting permission for such actions.
Do you need more details on the case or its implications for derivative actions?

what are the types of alternative dispute resolution in malaysia

In Malaysia, there are several types of Alternative Dispute Resolution (ADR) methods:
- Mediation: A neutral third party helps the disputing parties reach a mutually acceptable agreement.
- Arbitration: A neutral arbitrator makes a binding decision after hearing both parties' arguments.
- Conciliation: Similar to mediation but the conciliator plays a more active role in proposing solutions.
- Negotiation: Parties involved communicate directly to settle their dispute without third-party intervention.
Is there a specific type of ADR you are interested in, or do you have a particular dispute you need help with?

is mediation and conciliation similar?

Mediation and conciliation are similar ADR methods but have key differences:
- Mediation:
- Role: Mediator facilitates discussion without proposing solutions.
- Goal: Help parties reach a mutually acceptable agreement.
- Conciliation:
- Role: Conciliator plays an active role and may propose solutions.
- Goal: Encourage settlement by suggesting terms.
Would you like more detailed information on either process?

how about adjudication

Adjudication is another form of Alternative Dispute Resolution (ADR) often used in the construction industry. Here are some key points about adjudication in Malaysia:
- Definition: A process where an independent third party (the adjudicator) makes a decision on a dispute.
- Legal Basis: Governed by the Construction Industry Payment and Adjudication Act * (CIPAA).
- Speed: It's designed to be faster and less formal than court proceedings.
- Binding: The decision is binding but can be challenged in court.
Would you like more details on the adjudication process under CIPAA?

what is alternative dispute resolution?

Alternative Dispute Resolution (ADR) includes methods for resolving disputes without going to court.
Key types in Malaysia:
- Mediation: Facilitator aids parties in reaching an agreement.
- Arbitration: Arbitrator makes a binding decision.
- Conciliation: Conciliator suggests solutions.
- Negotiation: Parties communicate to settle the dispute.
- Adjudication: For construction disputes, governed by CIPAA *.
Anything specific you need to know about ADR?

explain further

Sure, here’s more about Alternative Dispute Resolution (ADR) methods:

Mediation:
- Role: Mediator facilitates discussions without proposing solutions.
- Goal: Help parties reach a mutually acceptable agreement.
- Characteristics: Voluntary, non-binding until agreement is reached, confidential.

Arbitration:
- Role: Arbitrator hears both parties and makes a binding decision.
- Goal: Provide a binding resolution without going to court.
- Characteristics: Formal, legally binding, can be quicker than court.

Conciliation:
- Role: Conciliator actively proposes solutions.
- Goal: Encourage settlement through suggested terms.
- Characteristics: Less formal than arbitration, non-binding until accepted.

Negotiation:
- Role: Parties communicate directly to resolve the dispute.
- Goal: Reach a mutually acceptable settlement.
- Characteristics: Informal, voluntary, non-binding unless formalized.

Adjudication:
- Role: Adjudicator makes a decision on a dispute.
- Goal: Provide a quicker, binding resolution.
- Characteristics: Common in construction disputes, governed by CIPAA *, decisions can bechallenged in court.
Would you like to explore a specific type of ADR in more detail or discuss how to apply these methods in a particular situation?

Understanding Derivative Actions

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