Fact Pattern 40-1A (Questions A18-A19 apply)
Ruben is a shareholder of Speed Bikes Company (SBC).When the direc?tors fail to undertake an action to redress a wrong suffered by SBC,Ruben files a suit on the firm's behalf.
-Refer to Fact Pattern 40-1A.Ruben's suit is a shareholder's

Question

Quizplus · Accepted Answer

Ruben's suit is a derivative suit, which is a legal action brought by a shareholder on behalf of the corporation against a third party. In this case, Ruben is suing on behalf of SBC because the directors have failed to take action to redress a wrong suffered by the corporation. Indemnification suits are brought by a shareholder against the corporation for reimbursement of legal costs incurred in defending against a lawsuit. Proxy suits are brought by a shareholder to challenge a decision made at a shareholder meeting. Preemptive suits are brought by a shareholder to prevent the dilution of their ownership rights in the corporation. None of these types of suits apply to Ruben's situation.

Fact Pattern 40-1A (Questions A18-A19 Apply)