SH derivative suits

Question 1

derivative suit, a SH is suing to

Answer 1

enforce corporation’s claim → SH believes corp has been wronged but BOD has not done anything to enforce the corps rights

ALWAYS ASK: could corp have brought this suit? if yes, then derivative suit

Question 2

derivative suit vs direct action

Answer 2

DA brough for breach of fiduciary duty owed by SH to officer or director

Question 3

how to differentiate breach of duty owed to corp vs. SH

Answer 3

1. who suffers most immediate and direct harm? corp or SH?
2. to whom did D’s duty run, corp or SH?

Question 4

recovery to corp

Answer 4

corporation gets money from the judgement in a derivative suit

Question 5

requirements for derivative suits

Answer 5

1. standing
2. SH makes a written demand to corp to take action
3. corp has to be joined as a D in the suit
   
   1. note: even tho the suit assets the corporation’s claim, the corp is joined as a defendant because it did not assert the claim itself

Question 6

derivative suits can be settled or dismissed:

Answer 6

only with court approval