California Corporate & Securities Law

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.

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...

When bad things happen to corporations, derivative suits are sure to follow.  So it was for Galectin Therapeutics, Inc., a Nevada corporation.  Following publication of allegations of a "stock promotion scheme", stockholders filed derivative suits...

UCLA Law School Professor Stephen Bainbridge recently critiqued the Nevada Supreme Court's decision to follow Auerbach v. Bennett, 419 N.Y.S.2d 920 (1979) rather than Delaware's Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981).  He concludes:

Nevada law endows a board of directors "full control over the affairs of the corporation".  NRS 78.120(1).  This control is subject only to such limitations as may be provided by NRS chapter 7, or the articles of incorporation of the corporation.  ...

I have long puzzled over the question of which is correct - "derivative suit" or "derivative action"?  Historically, the term "suit" was used for proceedings in equity.  California courts have generally regarded shareholder derivative claims as...

In an August 17, 2017 opinion piece published in The Wall Street Journal, Jon L. Pritchett and Ed Tiryakian had the following message for shareholders: