What Every Business Owner Needs to Know About Shareholder Derivative Lawsuits

Shareholder Derivative Lawsuits

Shareholder derivative lawsuits are claims that belong to the corporation but are filed by individual shareholders because the management or Board of Directors is unwilling or unable to initiate the lawsuit. These lawsuits are used to expose fraud or other breaches and can also be a practical course of action when management is believed to have done something unethical.

Individual shareholders hold little power and elect a Board of Directors to oversee the day-to-day management of a company. The Board of Directors appoints Officers to oversee the management leaving both the Board of Directors and Officers in charge of protecting the shareholders within the company.

Types of Wrongdoing Shareholder Derivative Lawsuits Are Filed to Redress:

There are times when the Board of Directors and Officers are accused of harming the company and will not sue themselves. Individual shareholders have a legal right to file a lawsuit to protect the company from these wrongdoings.

  • Fraud
  • Conflict of interest
  • Wasting corporate assets
  • Greed
  • Breach of fiduciary duty
  • False or misleading financial statements
  • Corporate assets being spent
  • Accounting wrongdoing
  • Decisions that expose the company
  • Violating consumer protection or other laws
  • Inflated executive compensation

If there is a wrongful sale of complete control by majority shareholders, minority shareholders can bring about a shareholder derivative lawsuit. Minority shareholders who suffered damages will receive all monies recovered from the wrongful sale leaving the majority shareholders who sold control with nothing.

Paul J. Burkhart

Paul J. Burkhart is an experienced business attorney who demands accountability and corporate integrity. He represents and assists both individual and institutional shareholders and takes aggressive legal action when necessary to remove directors, win monetary proceeds from damages, or achieve corporate governance reform.

If you are an individual shareholder wishing to file a derivative suit against a corporation’s management, you will want a knowledgeable and experienced attorney representing you. Paul J. Burkart knows these types of claims and how Florida business law works.

Business Attorney Palm Beach Gardens

Our team assists both individuals, and business clients with all their legal needs, including business and Corporate Transactions, Business/Commercial and Civil Litigation, Real Estate, Intellectual Property, Family Law, and Estate Planning matters. We are a full-service private law firm ready to assist you with any request, large or small. Call 561-880-0155 or visit our website.

 

Law Offices of Paul J Burkhart, PL
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Phone: (561) 880-0155

 

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