Where a shareholder believes that a director has acted improperly as against the interests of the corporation, he or she will commence

Question

Quizplus · Accepted Answer

A derivative action is a lawsuit brought by a shareholder on behalf of a corporation against a third party, often an insider of the corporation, such as an executive officer or director, when the corporation has failed to take action against the wrongdoer. This type of action is used when it is believed that the directors have acted improperly or against the interests of the corporation.

Where a Shareholder Believes That a Director Has Acted Improperly