California Corporate & Securities Law

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...

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...

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...

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...

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.

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...

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...

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...