3.3.4 Procedure

The aggrieved member has to bring the action against the company of which he is member and against all members of this company whose interest may be affected by the relief sought.1 For those later members it is not required that they have all acted in the alleged unfürly prejudicial manner. In case of small private companies, the action is generally brought to the company and to all remaining members. Moreover, it is possible to involve others in the proceedings, such as former members, directors and even outsiders, provided that the relief sought affects their interests. For instance, third parties can be involved in proceedings if they are knowingly involved in the diversion of corporate funds or improperly assisted in this diversion.2

Proceedings onder S. 994 can be started at the High Court or a county court.3 Appeal from a High Court or a County Court can be made to the Court of Appeal. An appeal to the Court of Appeal requires permission. This permission must be applied for and can be given by the lower court or the appeal court. Permission to appeal will only be given if there the appeal would have a real prospect of success or if there is another compelling reason to allow the appeal.4 With regard to second appeals and appeal to the House of Lords, the same rules apply as to the winding-up of the company.5

When a Section 994 petition is lodged, the court will fix a day, the return day, on which directions are given to parties.6Normally on this day, the court will give an order for standard disclosure. This standard disclosure order requires each party to disclose the documents on which the party relies and the documents which adversely affect his own case or adversely affect or support the case of the other party.7

The requirement to disclose these documents is a typical feature of procedural law that can only be found in Common Law countries. Comparable requirements are not found in the procedural rules of Civil Law countries. According to Zweigert and Kötz, this disclosure requirement stems from the way procedures are set up in the discerned law systems.8 An important difference between both systems is that in Common Law systems one single hearing is held, @@9 whereas Civil Law systems offer the possibility to divide a trial in several hearings. As one single trial is held, parties may be confronted with unexpected evidence or arguments, in which case an adjournment is not possible. In order to overcome this problem, the Common Law offers the disclosure requirement.

Under the current Civil Procedure Rules, it belongs to the courts' discretion to decide whether and how to take a decision on the costs of the proceedings.10 Usually, the unsuccessful party will be ordered to pay the costs of the successful party, but the court may decide otherwise.11 So, if the petitioner is successful in establishing that the affürs of the company are being or have been conducted in an unfürly prejudicial way, the respondent will usually be ordered to pay the costs of the procedure. With respect to the decision on the costs of the proceedings, the court may also take into account the conduct of parties before and during the proceedings.12 For instance, a reasonable offer for the purchase of the shares of the petitioner or the Jack of it can influence the decision about which party has to bear the costs of proceedings.

Although it is not prescribed, in order to act reasonably and proportionally Lightman and Drake advise to inform the future respondent by means of a letter before the proceedings are started. This letter must include all relevant information about the forthcoming claim and copies of documents on which the claim will be based. The future respondent must also be granted a reasonable time to react on this letter.13