Our Firm is Experienced in Shareholder Litigation
At Gary S. Edinger, P.A., we take great interest in solving your legal problems with dedicated advocacy. With over 30 years’ experience we have a great reputation for effective litigation. We are located in Gainesville, Florida, and will represent you in matters involving shareholder litigation.
What is a Shareholder Derivative Suit?
A shareholder derivative Suit is a lawsuit brought by a shareholder against a third party who is often an executive officer or director. Normally management is responsible for bringing and defending the corporation against a suit. Derivative suits allow a shareholder to bring an action in the name of the corporation against parties allegedly causing harm to the corporation. If the directors, officers, or employees of the corporation are not willing to file an action, a shareholder may petition them to proceed and if that petition is not successful, the shareholder may bring an action on behalf of the corporation. Proceeds of a successful action is awarded to the corporation. A shareholder must satisfy some requirements to prove that there is validity before being allowed to proceed. The law may require the shareholder to meet qualifications, for example the minimum value of shares and the time of the holding by the shareholder, to make a demand on the corporate board to take action first, or to post bond or other fees in the event that the shareholder does not prevail.
Florida Law and Derivative Actions
In Florida, the statute governing shareholders’ derivative actions, Florida Statute Section 607.07401, states, “ A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made to obtain action by the board of directors.” The statute then requires the shareholder to allege that either the board of directors refused the demand, ignored the demand for 90 days, or the corporation would suffer irreparable harm if made to wait 90 days to commence action.
If the company begins an investigation into the demand, the court can put the lawsuit on hold until the outcome of the investigation. The court may dismiss the lawsuit if after the conclusion of a reasonable investigation, an independent majority of the board, a committee or other appointed individuals determine that the pursuit of the complaint is not in the best interest of the company.
The courts approval is required before the suit is dismissed or settled. A defendant may recover reasonable attorneys fees if the court finds the suit was bought without reasonable cause. A successful plaintiff may recover reasonable attorney’s fees from a judgement or settlement and the remainder of the recovery belongs to the company.
No matter which type of recourse you pursue, under Florida law, you have the right to observe certain financial information before you file a suit as long as your demand is made in good faith. You have the right to observe minutes of board, committee and shareholder meetings, records to any actions taken without a meeting, accounting records, shareholder records, information on the company’s officers, and directors, information relating to any other lawsuits against the corporation, and any relevant records and books associated with the corporation.
Consult the Gainesville Derivative Action Attorney at Gary S. Edinger, P.A.
It is important to get proper legal advice on these complex issues. To find out your legal rights and your responsibilities if you are in a shareholder dispute, contact Gary S. Edinger, P. A. attorney in Gainesville, Florida at 352-338-4440.