(1)A member of a company who brings a derivative claim under this Chapter must apply to the court for permission (in Northern Ireland, leave) to continue it.
(2)If it appears to the court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission (or leave), the court—
(a)must dismiss the application, and
(b)may make any consequential order it considers appropriate.
(3)If the application is not dismissed under subsection (2), the court—
(a)may give directions as to the evidence to be provided by the company, and
(b)may adjourn the proceedings to enable the evidence to be obtained.
(4)On hearing the application, the court may—
(a)give permission (or leave) to continue the claim on such terms as it thinks fit,
(b)refuse permission (or leave) and dismiss the claim, or
(c)adjourn the proceedings on the application and give such directions as it thinks fit.
Cases considering section 261 (45)
[2024] EWCA Civ 299 · 26 March 2024
Applied as providing the two-stage permission structure for the imported procedure: a first-stage screening process and, if it is passed, a second-stage hearing (see [20]).
Applied as requiring dismissal at the first stage if the application and evidence disclose no prima facie case. The present appeal concerned the subsequent second-stage permission decision (see [20]; [24]-[27]).
[2023] EWCA Civ 873 · 21 July 2023
The preliminary permission stage requires the court to assess whether the application and supporting evidence disclose a prima facie case for permission. (see paras [137]-[140])
At the preliminary stage, an application must be dismissed if the application and evidence do not disclose a prima facie case for permission. (see paras [137]-[140])
Cited only.
Cited only.
[2026] EWHC 2004 (Ch) · 30 July 2026
The court applies the two-stage permission structure for derivative actions. Stage 1 is paper-based and stage 2 determines whether permission should be given, refused or adjourned. (see paras [1]; [7])
The court identifies the first-stage threshold as a prima facie case assessed on the claimant’s materials. (see para [7])
The court applies the second-stage power to give permission, refuse permission or adjourn with directions after fuller evidence and submissions. (see paras [7]; [11])
25 more judgments, and what each says about section 261, are in the
case-law panel in the full Act.
495.This clause provides that, once proceedings have been brought, the member is required to apply to the court for permission to continue the claim. This reflects the current procedure in England and Wales under the Civil Procedure Rules. The applicant is required to establish a prima faciecase for the grant of permission, and the court will consider the issue on the basis of his evidence alone without requiring evidence to be filed by the defendant. The court must dismiss the application at this stage if what is filed does not show a prima facie case, and it may make any consequential order that it considers appropriate (for example, a costs order or a civil restraint order against the applicant). If the application is not dismissed, the court may direct the company to provide evidence and, on hearing the application, may grant permission, refuse permission and dismiss the claim, or adjourn the proceedings and give such directions as it thinks fit. This will enable the courts to dismiss unmeritorious claims at an early stage without involving the defendants or the company.