California Corporate & Securities Law

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 Cal....

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 the...

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...

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...

Earlier this week, Kevin M. LaCroix wrote about a lawsuit filed recently against The We Companies, commonly referred to as WeWork.  The company attracted a lot of press attention when in September it withdrew the registration statement for its...

Section 800(b)(1) of the California Corporations Code imposes the following standing requirement for derivative lawsuits:

A derivative claim is one brought by a shareholder on behalf of the corporation to recover for harm done to the corporation.  Cohen v. Mirage Resorts, Inc., 62 P.3d 720, 732 (Nev. 2003).  However, when a derivative action is initiated, the corporation...

Unlike the federal courts and Delaware's Court of Chancery, California has a statutory demand requirement.  Section 800(b)(2) of the Corporations Code provides:

Shareholders are the persons who enjoy the most rights under the California General Corporation Law. A "shareholder" is not just anyone with rights in the shares, Corporations Code Section 185 defines a "shareholder" as "a holder of record of...