Derivative Action in United Kingdom

Definition of Derivative Action

In accordance with the work A Dictionary of Law, this is a description of Derivative Action : Civil proceedings brought by a minority of company members in their own names seeking a remedy for the company in respect of a wrong done to it. Such proceedings are exceptional; usually an action should be brought by the company (the injured party) in its own name. A derivative action will only be permitted when a serious wrong to the company is involved, which cannot be ratified by an ordinary resolution of company members (e.g. an *ultra vires or illegal act or a case of *fraud on the minority) and the majority of members will not sanction an action in the company’s name.

Compare representative action.