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A recent first instance decision by the BVI Commercial Court sheds some light on the scope of derivative actions under BVI law. Simply described, a derivative action is defined under section 184C (1) of the BVI Business Companies Act, 2004 (as amended) (the “BCA”) as a claim brought by a shareholder in the name or on behalf of a company or the ability of a member to intervene in proceedings to which the company is a party to continue, defend or discontinue those proceedings on behalf of the company. This remedy is usually sought after by members of closely held companies in circumstances where directors, far too often for their own protection, refuse or fail to ensure that the company pursues a viable cause of action.
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Members’ Remedies: What investors should know about derivative actions under BVI law