Before filing a derivative lawsuit,shareholders must
A)notify the board that the corporation has been wronged and ask the board to bring suit in the name of the corporation directly.
B)notify the Secretary of State that the corporation has been wronged and ask the Attorney General to file the lawsuit on behalf of the corporation.
C)hold a special meeting, and a majority of the shareholders must vote to file the lawsuit.
D)place the lawsuit on the company's proxy statement, and the proposal must receive a majority vote.

Question

Quizplus · Accepted Answer

Before filing a derivative lawsuit, shareholders must first notify the board that the corporation has been wronged and ask the board to bring suit in the name of the corporation directly. This is known as making a demand on the board, and it gives the board the opportunity to investigate the claim and decide whether or not to bring a lawsuit. If the board refuses to bring suit, or if the shareholders believe that the board's decision was improper, they may then file a derivative lawsuit on behalf of the corporation.

Before Filing a Derivative Lawsuit,shareholders Must