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Derivative Action |
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A lawsuit brought by a shareholder of a corporation on its behalf to enforce or defend a legal right or claim, which the corporation has failed to do. A derivative action, more popularly known as a Stockholder's Derivative Suit, is derived from the primary right of the corporation to seek redress of legal grievances through the courts. The procedure to be followed in such an action is governed by the rules of federal Civil Procedure and state provisions, where applicable. derivative action n. a lawsuit brought by a corporation shareholder against the directors, management and/or other shareholders of the corporation, for a failure by management. In effect, the suing shareholder claims to be acting on behalf of the corporation, because the directors and management are failing to exercise their authority for the benefit of the company and all of its shareholders. This type of suit often arises when there is fraud, mismanagement, self-dealing and/or dishonesty which are being ignored by officers and the Board of Directors of a corporation. (See: corporation) How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| Unlike the more familiar shareholder class-action lawsuits, in which investors sue to recover their own losses, a derivative action is filed against a company's officers by shareholders acting on the company's behalf. The purpose of this Notice is to inform you of the proposed partial settlement (the "Partial Derivative Settlement") of the derivative action and of the hearing to be held by the Court on May 29, 2007 at 8:00 a. Also recent judgments, including last year's $100 million settlement of case against HealthSouth directors and officers and another $200 judgment against AOL Time Warner directors and officers, raise concern that not only will more derivative action suits come to court, but also that the courts appear sympathetic to demands for large monetary settlements. |
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