Section 237 derivative action preparation checklist
A statutory derivative action allows a member or officer to bring proceedings in the company's name. This checklist helps litigators scope leave applications under section 237.
This is a 12-step checklist for preparing a statutory derivative action under section 237 of the Corporations Act 2001 (Cth). It covers standing, notice, and the leave criteria.
The checklist
Confirm applicant standing
Confirm the applicant is a member, former member, or officer of the company.
Identify the cause of action
Identify the cause of action and why it belongs to the company.
Prove good faith
Gather evidence that the applicant is acting in good faith.
Show best interests
Prepare material showing the action is in the best interests of the company.
Establish serious question
Establish a serious question to be tried on the substantive claim.
Serve 14-day notice
Serve at least 14 days notice of intention to apply for leave.
Document board response
Document the board response and reasons for not bringing the action.
Assess litigation funding
Assess funding arrangements and indemnity from the applicant for costs.
Plan affidavit evidence
Plan affidavit evidence covering each of the section 237 criteria.
Draft originating process
Draft the leave application and the proposed proceeding.
Consider conflict with directors
Identify actual or apparent conflicts across board members.
Plan costs order
Plan any application for costs indemnity from the company under section 242.
When this checklist applies
Use when scoping a section 237 leave application or advising a shareholder or director about potential derivative proceedings.
Common pitfalls
- 14-day notice not served or improperly served
- Good faith evidence thin on motive
- Best interests argument not supported by independent advice
- Serious question to be tried merged with merits application
- Costs indemnity not sought at leave stage
Run this checklist on a real matter
Quillio can summarise the section 237 criteria, draft notice letters, and map precedents. See /practice-areas/litigation or start a free trial.
General Corporations Act guidance. Derivative action strategy is fact-sensitive — verify with up-to-date authority.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
Start your free trial