Derivative Suit
/dəˈrɪvətɪv suːt/
Definitions
- (n.) A lawsuit brought by a shareholder on behalf of a corporation to enforce a right the corporation has failed to assert.
The shareholder filed a derivative suit to address the board's alleged breach of fiduciary duty.
Forms
- derivative suits
Related terms
Commentary
Derivative suits require the plaintiff to demonstrate demand futility or make a demand on the board before proceeding; they differ from direct suits in that the claim belongs to the corporation, not the individual shareholder.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.