What is a shareholder derivative action?

A shareholder derivative action is a legal claim brought by a shareholder of a company on the company’s behalf. This type of lawsuit is used to protect the interests of the company and its shareholders from any wrongdoing or misconduct by another party. The action is brought in the name of the corporation, rather than the individual shareholder, and it is the company that holds the legal right to make the claim. In Maryland, this type of action is often used when directors or officers fail to act in the best interests of the company and its shareholders. These types of cases are often complex and can involve a variety of difficult legal issues. In order to prove the case, a shareholder must typically show that the directors or officers did not act responsibly and that their conduct was a breach of their fiduciary duty to the company. Shareholder derivative actions are an important part of corporate law in Maryland as they allow shareholders to enforce their rights when corporate directors or officers fail to act in the best interests of the company. These legal claims are often the only way to hold these individuals accountable for their wrongful activities.

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What is a shareholder derivative action?

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