Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

shareholder's derivative action

Read a random definition: Court Appointed Special Advocates

A quick definition of shareholder's derivative action:

A shareholder's derivative action is when a shareholder or group of shareholders sue a corporation's directors, officers, or other third parties who have breached their duties. The lawsuit is brought on behalf of the corporation, not the shareholder, and any damages awarded go to the corporation. Shareholders can only sue if the corporation has a valid cause of action but has refused to use it. The purpose of the lawsuit is to protect the interests of the corporation. Shareholders must meet certain requirements to bring a derivative action, including being a shareholder at the time of the act or omission complained about and making a demand in writing requiring the corporation to take suitable action before the lawsuit. The lawsuit can be dismissed if most of the qualified directors determine in good faith that it is not in the best interests of the corporation.

A more thorough explanation:

A shareholder's derivative action is a lawsuit 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 shareholder can only sue when the corporation has a valid cause of action but has refused to use it. The damages awarded in the suit go to the corporation, not the shareholder. The shareholder may ask for a reasonable cost paid for litigation.

Example 1: A corporation's board of directors makes false statements that cause the corporation to suffer a loss in share value. The corporation refuses to take action against the board of directors. A shareholder can bring a derivative action on behalf of the corporation to hold the board of directors accountable for their breach of duty.

Example 2: A corporation's CEO embezzles funds from the corporation. The corporation takes action against the CEO, but the damages awarded are not enough to fully compensate the corporation for its losses. A shareholder can bring a derivative action on behalf of the corporation to recover additional damages from the CEO.

These examples illustrate how a shareholder's derivative action is used to protect the interests of the corporation when the corporation has a valid cause of action but has refused to use it.

shareholder derivative suit | shareholders' agreement

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
I mean, you got to be a bit of a sadist to be in adcoms lol
JumpySubsequentDolphin
11:09
does WUSTL send emails or call?
JumpySubsequentDolphin
11:09
or both?
11:10
I got a call first
JumpySubsequentDolphin
11:10
I interviewed like two weeks ago, not sure how quick they get back to peeps post interview
JumpySubsequentDolphin
11:10
but my interview was a disaster so not holding onto hope
Late to the party but my name is Paul Leachman in Delray Beach, FL (WashU pls respond)
11:11
Why is it taking so long for WashU to get back to me. Ppl are getting acceptances in a month or less
letsseehowitgoesnow
11:11
...
triplethread
11:11
@BookLover125: RETWEET
triplethread
11:12
is it bad i lied about getting into case western bc my parents are bugging me about my first a
@BookLover125: they are so impressed with your application they are renaming the library after you before admitting you
Do you know not everyone says they were ED?
11:12
No they shouldn’t be bugging you this is stressful enough without them adding More. Do what u gotta do
11:13
Got jokes I see
triplethread
11:13
its sooo stressful and im not even done applying
Just apply and get the A lol
triplethread
11:13
got like 3 more apps
there should be a law school draft akin to the NFL Draft where law schools can recruit us
or a MaxPreps esque high light video where Deans can rank us
1a2b3c4d26z
11:15
In this analogy is the LSAT the NFL combine
JumpySubsequentDolphin
11:16
I told my family I won’t get any decisions until 2025 so they wouldn’t bombard me hahah
no i think there should be a Law School combine with all new drills except there is still the 40 yard dash
and a sub 4.5 gets you into any t14
LSAT can be one of the drills
letsseehowitgoesnow
11:17
so washu only called one person
So all the D1 athletes will get into a T-14. What else is new?
@TheAdoptedOne: that is called "Dean Poker Night" lol
@ClockworkBlue: I feel like most people could train for the 40 for the same amount of time as they do the LSAT and get close to sub 5 which would be equivalent to a 167+
LSD+ is ad-free, with DMs, discounts, case briefs & more.