Derivative actions Flashcards
What is the lynchpin of corporate law?
The business affairs of companies are under the board of directors
What are the 4 possible protections for directors of a corporation?
- Business judgment rule
- Indemnification – 0850
- Insurance
- Automatic exculpation (not in Delaware)
When MUST a corporation indemnify a fiduciary?
A corporation must indemnify a fiduciary who successfully defends on charges (on merits or otherwise)
When MAY a corporation indemnify a fiduciary?
A corporation may indemnify fiduciary in any other instance if he:
• Acted in good faith; +
• Reasonably believed he was acting in best interest of corporation; +
• Had no reason to believe his conduct was unlawful.
What are the standing requirements for a derivate action in Florida?
(1) Contemporaneous ownership (at time of complained act and at time of suit); and
(2) Written demand made or excused/futile: (demand and notice is the same thing)
- Plaintiff must make written demand (or suit will be filed for failure to do so) +
- Plaintiff must plead with particularity facts showing: that the business judgment rule doesn’t apply; and that Defendants are not independent or disinterested.
What are the standing requirements for a derivate action in Delaware?
(1) Contemporaneous ownership (at time of complained act and at time of suit); and
(2) No demand; notice is excused/futile
Plaintiff should not make demand (making demand gives board of director’s refusal to file suit under business judgment rule protection).
Plaintiff should particularly describe facts showing demand would be futile because:
• Business judgment rule doesn’t apply, or
• Defendants are not independent or not disinterested (Aronson test)
What kind of action is the following: A claim based on false and misleading proxy solicitation
Individual action
What kind of action is the following: A claim against a voting trustee for a breach of her obligations
Individual action
What kind of action is the following: An action against a director for disseminating false reports about the validity or value of shareholder’s stock that harms the shareholder in his individual capacity as an investor
Individual action
What kind of action is the following: An action to recover damages from an ultra vires act
Derivative action
What kind of action is the following: A suit to compel the directors to dissolve the corporation due to director misconduct
Derivative action
What kind of action is the following: Breach of fiduciary duty during a merger transaction
Derivative action
