derivative action
- A lawsuit initiated by a shareholder against the corporation's leaders or other stakeholders for mismanagement or deception with the purpose of benefiting the company; any settlement from this action goes to the corporation, not the suing shareholder
- The minor shareholder initiated a derivative action when he realized the directors were mismanaging the company's resources.
- In order to protect the company and its assets, a concerned shareholder might consider a derivative action against dishonest corporate leaders.
- A derivative action was the last resort for shareholders to reign in the reckless decisions of the board.
Provide Feedback
