What is the difference between a derivative action and a class action against an Ontario corporation?

A derivative action is brought by one or more shareholders on behalf of the corporation itself, to recover for harm the corporation suffered, typically from a director's or officer's wrongdoing, and it requires the shareholder to first get court leave, since they are stepping into the corporation's own right to sue. A class action, by contrast, is a procedural device that lets one or more representative plaintiffs sue on behalf of a larger group of people who each have their own individual claim against a defendant, based on common issues shared across the group — shareholders who each personally lost money because a corporation issued misleading public statements might bring a class action for their own losses as investors, rather than suing on the corporation's behalf.

The key distinction is who the claim actually belongs to: a derivative action asserts the corporation's cause of action, and any recovery generally goes to the corporation, while a class action asserts each class member's own personal claim, and any recovery goes to the class members themselves. The two are not mutually exclusive in a single dispute — the same underlying misconduct could give rise to both a derivative claim against wrongdoing insiders and a class action by investors for their own losses, pursued through separate legal processes.