Pre-Suit Demand Pleading Procedure in a Shareholder Derivative Action | Practical Law

Pre-Suit Demand Pleading Procedure in a Shareholder Derivative Action | Practical Law

A Practice Note outlining the process for litigating the pre-suit demand requirement under which a shareholder must ask the company's, LLC's, or partnership's board of directors to sue on behalf of the entity before the shareholder may commence a derivative suit in either the Delaware Court of Chancery or in federal district court. Specifically, this Note discusses a plaintiff shareholder's pleading requirements under Federal Rule of Civil Procedure 23.1 and Delaware Court of Chancery Rule 23.1 to establish either wrongful refusal of the shareholder's demand or demand futility, bringing a books and records inspection demand to bolster the complaint's demand allegations, moving to dismiss a shareholder derivative complaint for failure to adequately plead demand refusal or demand futility, and appealing the court's dismissal of a complaint for failure to adequately plead wrongful demand refusal or demand futility.

Pre-Suit Demand Pleading Procedure in a Shareholder Derivative Action

Practical Law Practice Note w-019-6884 (Approx. 18 pages)

Pre-Suit Demand Pleading Procedure in a Shareholder Derivative Action

by Practical Law Commercial Litigation
MaintainedDelaware, USA (National/Federal)
A Practice Note outlining the process for litigating the pre-suit demand requirement under which a shareholder must ask the company's, LLC's, or partnership's board of directors to sue on behalf of the entity before the shareholder may commence a derivative suit in either the Delaware Court of Chancery or in federal district court. Specifically, this Note discusses a plaintiff shareholder's pleading requirements under Federal Rule of Civil Procedure 23.1 and Delaware Court of Chancery Rule 23.1 to establish either wrongful refusal of the shareholder's demand or demand futility, bringing a books and records inspection demand to bolster the complaint's demand allegations, moving to dismiss a shareholder derivative complaint for failure to adequately plead demand refusal or demand futility, and appealing the court's dismissal of a complaint for failure to adequately plead wrongful demand refusal or demand futility.