A shareholder derivative action is a lawsuit filed by individual or institutional shareholders on behalf of a corporation and against corporate management when officers and directors are breaching their fiduciary duties and are harming the corporation. Shareholder derivative suits are necessary to circumvent the conflict that arises when the officers and directors who would ordinarily file a suit on behalf of a corporation are among those who are damaging it.
Kohn Swift is a leader in shareholder derivative suits. Our representation has enabled institutional and individual investors who have brought suit on behalf of corporations injured by breaches of fiduciary duty to recover significant losses on behalf of the corporation. In addition to recovering monetary damages, our securities lawyers help achieve meaningful corporate reforms that benefit the corporation going forward.
SHAREHOLDER DERIVATIVE LITIGATION
Shareholder derivative actions are filed pursuant to state law. The requirements for an action can vary by state.
A shareholder may seek on behalf of the corporation monetary payments to remedy damages incurred by the company, repayment of illegally obtained funds, corporate governance reforms, and removal of officers or directors whose actions caused injury. The shareholder benefits indirectly as a shareholder for any monetary recovery by the corporation and/or governance reforms.