DISTRIBUTED BY VERITAS TRUST Tel: [263] [4] 794478 Fax & Messages [263] [4] 793592 E-mail: veritas@mango.zw Veritas makes every effort to ensure the provision of reliable information, but cannot take legal responsibility for information supplied. Judgment No. SC 34/18|13 Civil Appeal No. SC 165/16 prevented the company from instituting such proceedings. On record is a letter from the first and second respondents’ South African legal practitioners threatening to institute proceedings on their behalf. Whether or not the first respondent attempted to call for a meeting with the third respondent is a question of fact which must be proved by evidence. In this case, it was not proved that an attempt was made. As a result, it was not established that the second respondent was actively prevented by the third appellant from instituting the proceedings a quo in its own name. According to Gower L.C.M Principles of Modern Company Law pages 649-650, for derivative action to be justified: “It must be shown that the alleged wrongdoers control the company. The clearest way of doing this will be to show that both the directors and the general meeting have been invited to institute proceedings in the name of the company and have refused to do so, and that the refusal was because of the votes cast by the wrongdoers. However, the English cases recognise that there is no point in formally asking the directors to institute the proceedings if they are to be the defendants, and that it is not necessary to convene a general meeting and to invite it to resolve upon proceedings in the company’s name, provided that the court can be satisfied aliunde that the wrongdoers are in effective control.” (emphasis added) It is therefore clear that derivative action can be relied on in two circumstances. In the first situation, it must be proved that a meeting was called for the shareholders to pass a resolution for the company to institute proceedings. In the event that the other shareholders