Proceedings against fellow-members on behalf of corporation
section 50 of the close corporation act
.(1) Where a member or a former member of a corporation is liable to the corporation-
(a) to make an initial contribution or any additional contribution contemplated in
subsections (1) and (2) (a), respectively, of section 24; or
(b) on account of-
(i) the breach of a duty arising from his fiduciary relationship to the corporation
in terms of section 42; or
(ii) negligence in terms of section 43,
any other member of the corporation may institute proceedings in respect of any such
liability on behalf of the corporation against such member or former member after
notifying all other members of the corporation of his intention to do so.
(2) After the institution of such proceedings by a member the leave of the Court concerned
shall be required for a withdrawal of the proceedings or for any settlement of the claim,
and the Court may in connection with such withdrawal or settlement make such orders as
it may deem fit.
note section 50 subsection 3:
(3) If a Court in any particular case finds that the proceedings, if unsuccessful, have been
instituted without prima facie grounds, it may order the member who has instituted them
on behalf of the corporation, himself to pay the costs of the corporation and of the
defendant in question in such manner as the Court may determine.