Frequently Asked Questions
Derivative Actions
What is a derivative action?
A derivative action is a representative action brought by a shareholder of a corporation on the corporation’s behalf, usually against an officer or director of the corporation. Claims can include wasting of corporate assets and breach of fiduciary duties such as management self-dealing or negligence. The recovery will go to the corporation, which may have a positive effect on share value and corporate governance.
What if I sold my shares?
Since a derivative action is brought on behalf of the corporation, only current shareholders may bring claims and they must continue to hold their shares for the duration of the lawsuit.