Chapter 10: SH litigation

Question 1

derivative action

Answer 1

lawsuit filed by SH on behalf of the corporation

Question 2

derivative action limited due to

Answer 2

cost (coordination) > recovery (small chance, goes to corpo)

Question 3

litigation abuse

Answer 3

nuisance suits
cheap settlement
zero-sum suits

Question 4

to reduce friovolus situation

Answer 4

standing requirement
demand requirement
court approval

Question 5

tooley test

Answer 5

1. who suffered the harm ?
2. who get the recovery ?

Question 6

Common law litigation process

Answer 6

-> demand board (if refused -> BJR)
-> demand excused if futile (opposition -> SLC)

Question 7

Brehm vs Eisner

Answer 7

disney severance package -> cant prove futility (limited evidence due to restricted discovery)

Question 8

litigation dilemma

Answer 8

ask board -> risk refusal
skip it -> require strong evidence hard pre discovery

Question 9

Civil law litigation process

Answer 9

decision to sue from SH meeting -> avoid director suing themselves

Question 10

Art. 2393 bis ICC

Answer 10

qualifies minority can bring derivative suits if:
- private: SH own 20%
- listed: SH own 2.5%
- corpo notified & supervisory involved
- 1 or more lead plaintiff (majority vote)
- plaintiff wins -> corpo reimburse litigation

Question 11

spain Art. 239

Answer 11

(at least 5%) can
- call meeting -> sue directly
- not call meeting -> sue derivatively

Question 12

france L.225-252

Answer 12

single SH can sue, but bear cost -> discourage use
no demand requirement (only notification to director)
SH association -> exist but rare