derivative suit

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Stockholder Derivative Suit

A lawsuit filed by one or more shareholders of a publicly-traded company in the name of the company. Often, this lawsuit is filed against a member of the company's management who committed an illegal, unethical, or negligent act. Directors' and officers' liability insurance can protect the management from losses as the result of one of these lawsuits. They are also called derivative suits and derivative action.

derivative suit

References in periodicals archive ?
The Stipulation, and the settlement contemplated therein (the 'Settlement'), is subject to the approval of the Court, and is intended by the Parties to fully, finally, and forever compromise, resolve, discharge, and settle the Released Claims and to result in the dismissal of the Derivative Action with prejudice, upon the terms and subject to the conditions set forth in the Stipulation.
The Derivative Action is brought derivatively on behalf of ImmunoCellular and alleges that the Individual Defendants breached their fiduciary duties by knowingly or recklessly making and/or causing ImmunoCellular to make false and misleading statements of material fact to the investing public and by engaging and/or causing ImmunoCellular to engage in an improper stock promotion scheme.
Thus, England is developing its multiple derivative action regime
the company to pay the costs of the derivative action even if the
Federal Rule of Civil Procedure 23.1 might generate some confusion on this front with the following assertion: "The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association" (60).
(1) The recovery in a derivative action goes to the corporation itself, not the initiating shareholder.
(163) Any complaint that shareholders have should be made in reference to the corporate fiduciary duty and brought on behalf of the corporation through a derivative action. This approach is more economically efficient and preserves conceptual clarity, as will be explained further below.
The justice ministry recently submitted the revision plan that includes a cumulative voting system and multiple derivative actions. They all aim at restricting large shareholders' rights.
In the directors and officers liability marketplace, when we talk about settling claims, we're looking at a large influx of more securities class actions, derivative actions. They're driven by a lot of different causes.
4738, which passed by a 31-25 vote, amends section 36(b) of the Investment Company Act to provide that in derivative actions brought under the Act alleging a breach of fiduciary duty, the plaintiff must state with particularity all the facts establishing a breach of fiduciary duty and that the plaintiff must prove the breach of fiduciary duty to be clear and convincing evidence.
In addition to practicing in areas of insurance/ reinsurance coverage disputes, shareholder derivative actions, professional negligence defense, accountants' liability actions, catastrophic personal injury defense, complex construction disputes and long-term care defense, the firm is equipped to handle all of a business' legal needs, including formation, day-to-day business counseling, acquisition, disposition, merger and dissolution of companies, regardless of size.
Escalating Risks for Directors and Officers in Shareholder Derivative Actions