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    Does Requiring Shareholder Demand Increase Firm Value?

    California, like many other states, imposes a demand requirement on shareholders who want to maintain a derivative action.  Thus, Corporations Code Section 800(b)(2) requires that a plaintiff allege in its complaint with particularity "plaintiff’s...

    derivative action

    Nevada's Director Liability Standard Defeats Another Derivative Suit

    NRS 78.138(3) imposes a statutory presumption that other than in cases of a change in control of the corporation, directors and officers, in deciding upon matters of business, act in good faith, on an informed basis and with a view to the interests...

    Nevada Corporations, derivative action

    Lack Of Knowledge Defeats Breach Of Fiduciary Duty Claim

    Yesterday's post discussed Judge Mary Kay Vyskocil's ruling in Barenbaum v. Palleschi, 2020 U.S. Dist. LEXIS 180624 that the plaintiff's derivative claims were not "validly in litigation".  The case involved allegations that several executives and...

    Nevada Corporations, derivative action

    Court Finds Derivative Claims Involving Nevada Corporation Were Not "Validly In Litigation"

    A shareholder bringing a derivative claim, faces a choice.  The shareholder can either make a demand on the board of directors and then challenge the board's decision not to proceed or file a complaint alleging that the demand would be futile.  NRCP...

    Nevada Corporations, derivative action, derivative suit

    Nevada Supreme Court Finds California Precedent "Persuasive" In Appeal Of Derivative Action

    What, if any, is the standing of a corporation in a derivative action?  Until this month, that question was yet to be addressed by the Nevada Supreme Court.  We now have an answer.

    Nevada Corporations, derivative action, derivative suit

    LLC's Failure To File Cross-Complaint Dooms Double Derivative Action

    Although the members of a limited liability may file a derivative action, the right of action belongs to the LLC and not to the members themselves.  This fundamental principle had real consequences for the plaintiffs in Heshejin v. Rostami, 2020...

    Derivative Suits, derivative action

    If You Plan To Claim Demand Futility, You Had Best Not Make A Demand

    Rule 23.1 of the Nevada Rules of Civil Procedure specifies the pleading and standing requirements for shareholder derivative actions.  Among other things, Rule 23.1 requires that a complaint "allege with particularity the efforts, if any, made by...

    derivative action, derivative suit

    Can a breach of fiduciary duty suit be brought directly?

    In a recent posting, Professor Stephen Bainbridge breaks down the question of whether breach of fiduciary duty claims by a shareholder may be brought as direct, rather than, derivative claims.  The focus of his discussion is on breach of fiduciary...

    derivative action, derivative suit

    Does California Law Apply To A Derivative Action Brought By Members Of A Foreign LLC?

    In a ruling handed down this week, U.S. District Judge Lawrence J. O'Neill addressed whether California law applied to derivative claims apparently brought on behalf of an Oregon entity.  I found Judge O'Neill's ruling confusing at best.  First, he...

    revised uniform limited liability, derivative action

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