derivative action


derivative action
A legal action brought by a shareholder on behalf of a company, when the company cannot itself decide to sue. A company will usually sue in its own name but if those against whom it has a cause of action are in control of the company (i.e. directors or majority shareholders) a shareholder may bring a derivative action. The company will appear as defendant so that it will be bound by, and able to benefit from, the decision. The need to bring such an action must be proved to the court before it can proceed.

Accounting dictionary. 2014.

Look at other dictionaries:

  • derivative action — n: a suit brought by a shareholder on behalf of a corporation or by a member on behalf of an association to assert a cause of action usu. against an officer which the corporation or association has itself failed to assert for its injuries –… …   Law dictionary

  • derivative action — A legal action brought by a shareholder on behalf of a company, when the company cannot itself decide to sue. A company will usually sue in its own name but if those against whom it has a cause of action are in control of the company (i. e.… …   Big dictionary of business and management

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  • derivative action —    A lawsuit brought by a corporation shareholder against the directors, management and/or other shareholders for a failure by management. The suing shareholder claims to be acting on behalf of the corporation because the directors and management …   Business law dictionary

  • derivative action — noun or derivative suit : a suit by a shareholder to enforce a corporate cause of action based upon a right of the corporation …   Useful english dictionary

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  • derivative action — An action brought by one or more stockholders of a corporation to enforce a corporate right or to prevent or remedy a wrong to the corporation in cases where the corporation, because it is controlled by the wrongdoers or for other reasons, fails… …   Ballentine's law dictionary

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  • derivative action time — poveikio pagal išvestinę trukmė statusas T sritis radioelektronika atitikmenys: angl. derivative action time vok. Vorhaltzeit, f rus. время воздействия по производной, n pranc. temps par dérivation, m …   Radioelektronikos terminų žodynas

  • stockholders' derivative action — n.    See also: derivative action, shareholders derivative action Law dictionary. EdwART. 2013 …   Law dictionary