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Simple English definitions for legal terms

shareholder derivative suit

Read a random definition: mild exigency

A quick definition of shareholder derivative suit:

A shareholder derivative suit is a legal action brought by a shareholder or group of shareholders on behalf of a corporation against its directors, officers, or other third parties who have breached their duties. The lawsuit is not personal but belongs to the corporation, and any damages awarded go to the corporation instead of the shareholder. Shareholders can only sue when the corporation has a valid cause of action but has refused to use it. The purpose of the suit is to protect the interests of the corporation. Shareholders must meet certain requirements to file a derivative suit, including being a shareholder at the time of the act or omission that the suit complains about and making a written demand requiring the corporation to take suitable action before the action. The suit should not be collusive, and the complaint should allege with particularity any efforts made by the plaintiff to obtain the desired action from the directors or members. A derivative suit is different from a direct suit, where a shareholder can bring a direct suit against a director or officer if the corporation breached its duty and caused their actual injury.

A more thorough explanation:

A shareholder derivative suit is a legal action brought by a shareholder or group of shareholders on behalf of a corporation against its directors, officers, or other third parties who breach their duties. The purpose of the suit is to protect the interests of the corporation, not the individual shareholder. The damages awarded in the suit go to the corporation, not the shareholder.

For example, if a corporation's board of directors makes false statements that cause the company's stock value to drop, a shareholder can bring a derivative suit on behalf of the corporation to recover damages. The damages awarded would go to the corporation, not the shareholder.

A shareholder can only bring a derivative suit if the corporation has a valid cause of action but has refused to use it. The shareholder must also be a current shareholder at the time of the act or omission that the suit complains about and must maintain shareholder status throughout the entire judgment.

Unlike a direct suit, where a shareholder can sue a director or officer for personal injury, a derivative suit is brought to protect the interests of the corporation. The shareholder must make a written demand requiring the corporation to take suitable action before initiating the suit. If the corporation rejects the demand or will suffer irreparable harm if they wait, the shareholder can initiate the suit.

A derivative suit can be dismissed if most of the qualified directors, who do not have material interests in the suit, determine in good faith after conducting a reasonable inquiry that the suit is not in the best interests of the corporation.

Overall, a shareholder derivative suit is a legal action brought by a shareholder on behalf of a corporation to protect its interests against directors, officers, or other third parties who breach their duties.

shareholder | shareholder's derivative action

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ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
WorthlessAttractiveZombie
7:44
My berkeley paragraph finally disappeared. I definitely think it is just an indicator that they are actively reviewing files, and does not mean anything about A, WL, or Rs
WorthlessAttractiveZombie
7:46
Also has anyone's date disappeared for W&L? Mine did last night
7:55
@WorthlessAttractiveZombie: mine did yesterday morning
7:56
Oops sorry I meant Vilanova. Mine disappeared last week
soapy
8:48
UMN under review! As predicted, decisions are gonna come out early December
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