Shareholder and Derivative Actions

October 20, 2023

meeting of shareholdersBusiness litigation encompasses a wide array of complex legal scenarios, particularly when it involves shareholders within a company. Among these, direct shareholder actions and shareholder derivative actions stand out as crucial components.

Understanding the nuances of these actions is vital for any shareholder or corporation involved in business litigation. With a team of proven business litigation attorneys in Tampa, skilled in state and federal court proceedings across Florida and other states, our firm is adept at navigating the intricacies of shareholder and derivative lawsuits.

Direct Shareholder Action and Shareholder Derivative Action

‘Direct shareholder action’ pertains to a lawsuit filed by one or more shareholders against the company or its members for direct harm caused to them. This type of action addresses personal rights of the shareholders and seeks compensation for damages they directly incurred.

On the other hand, a ‘shareholder derivative action’ is a lawsuit filed by shareholders on behalf of the corporation against a third party, often insiders such as directors or executives. This action is taken when the corporation itself fails to take action against the wrongdoing that affects the company. The aim here is to redress harm done to the corporation, with any recovery going directly to the company, not the individual shareholders who initiated the lawsuit.

How Do Shareholder and Derivative Actions Work?

The process typically begins with a shareholder noticing alleged wrongdoing or harm to the shareholder themself or the corporation. In a shareholder derivative action, the shareholder must first demand that the corporation’s board address the issue. If the board fails to act, the shareholder may proceed with a lawsuit on behalf of the company. The intricacies of these actions in both state and federal courts demand a thorough understanding of business law and governance.

Whether you are facing a direct shareholder action or embarking on a shareholder derivative action, skilled business litigation attorneys in Tampa, FL are indispensable. At Robert Eckard & Associates, P.A., we guide our clients through these complex legal waters with precision and dedication. Contact us for a consultation and let us help you understand your case in shareholder and derivative actions or any other business litigation in Florida.

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