Derivative lawsuits generally refer to claims made relating to the mismanagement of a corporation or limited liability company. It is brought by a shareholder, as the corporation’s representative. Nickell v. Shanahan, 439 S.W.3d 223, 227 (Mo. 2014). The shareholder is only a nominal plaintiff, and the corporation or limited liability company is the real party…
Legal Articles
Corporate Derivative Lawsuits, Settlement
A derivative action refers to a type of business/corporate lawsuit. They are equitable actions which “place in the hands of the individual shareholder a means to protect the interests of the corporation from the malfeasance of faithless directors and managers.” Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991). In essence, it is a…
Corporate Derivative Lawsuits: Elements & Purpose
A derivative lawsuit is when a shareholder sues directors on behalf of the corporation for some impropriety. It is termed a “derivative” lawsuit because the lawsuit arises out of the individual shareholder’s ownership of shares in the company. Most types of derivative lawsuits allege mismanagement against the directors or other specific instances of fiduciary misconduct…
Corporate Derivative Lawsuits & Adequacy of Representation
A corporate derivative lawsuit is a lawsuit brought by shareholder(s) on behalf of a corporation against its director(s). The basis for the underlying lawsuit can be for any number of reasons, but is generally for a director’s breach of fiduciary duty to the corporation (e.g., conflict of interest, business judgment, misused of funds, etc.). See Hyde…