Lastly, the corporation itself must have a legal cause of action against the director whose removal is sought. There are two basic elements that encompass a shareholder derivative lawsuit: First there must be some recognized injury to the corporation or to the whole body of its stockholders Second, the corporation (Board of Directors) or the responsible official(s) within the corporation have failed or refused to act. In a derivative suit, the shareholder(s) who files the action(s) against the corporation’s director stands in the place of and represents the corporation as a whole. The act of having a corporate director removed from the Board of Directors constitutes a derivative action and the process by which the shareholder(s) must go through are specific and must be followed precisely otherwise the shareholder(s) will lack standing in Court to pursue the relief sought.Ī derivative suit is also an action in equity and the party bringing the lawsuit must come to court with clean hands. This means that the party seeking the director’s removal must not be guilty of any wrong doing or bad faith himself. A lawsuit seeking the removal of a corporate director is an equitable remedy and the party bringing such an action must do so with clean hands. A shareholder has the right to petition the court for the removal of a corporation’s director if that director is acting in bad faith and not in the best interests of the corporation and its shareholders.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |