When a derivative law suit is filed:
A) majority shareholders may complain that minority shareholders are not cooperating with the board.
B) majority shareholders are required to prove that they are not acting illegally or oppressing the rights of minority shareholders.
C) minority shareholders are required to provide evidence that the majority shareholders are acting illegally or oppressing the rights of the minority shareholders.
D) directors are suing the officers and asking for their termination due to illegal or oppressive acts directed at all shareholders.
E) majority shareholders act on behalf of the organization.

Question

Quizplus · Accepted Answer

If the majority is acting illegally or oppresses the rights of the minority shareholders, a lawsuit known as a derivative suit may be brought by a minority shareholder on behalf of the corporation. If a suit is brought, the burden is on the director or officer (who may be the majority shareholder) to prove good faith and inherent fairness in such transactions.

When a Derivative Law Suit Is Filed