What is a shareholder class action?

A shareholder class action is a type of legal action that is brought on behalf of shareholders of a corporation. This type of action is typically used when a group of shareholders believe that the directors or managers of a company have caused a loss of value for the corporation’s stockholders due to some kind of wrongful or negligent behavior. In a shareholder class action, all of the shareholders who own the stock of the company will be a part of the legal action, as they are all considered to be a part of a “class” of people who have sustained a loss due to the company’s actions. The legal action in a shareholder class action is handled in the courts of New York. Usually, the group of plaintiffs will be represented by a single lawyer, who will file the case on behalf of all the shareholders of the company. The lawyer will then work with the court to determine what kind of compensation or damages should be awarded to the shareholders as a whole. These damages typically come in the form of a monetary settlement, which is usually paid out of the company’s profits. In the state of New York, the laws that govern shareholder class action lawsuits are generally quite favorable towards the shareholder class, as they provide for a relatively quick resolution of the case. Furthermore, in many cases, the defense lawyers representing the company are not allowed to use certain tactics in order to reduce or avoid any potential liability. As such, shareholder class actions are a great way for shareholders to protect their investments and obtain justice from wrongdoings by corporate officers.

Related FAQs

What are the corporate filing requirements?
What is the process for corporate liquidation?
What is the process for changing corporate directors?
What is a shareholder agreement?
What is the role of corporate auditing?
What is a corporate spin-off?
What is the process for issuing corporate notes?
What is the purpose of a corporate compliance policy?
What is a private placement?
What is a shareholder class action?

What is a shareholder class action?

Related FAQs

Related Blog Posts