#44 · 2026-09-19 · Legal term
Shareholder derivative action
A shareholder derivative action enforces a claim belonging to the corporation. The identity of the injured party and recipient of recovery distinguish it from a direct shareholder claim; demand rules depend on the governing law.
Rule to remember
A shareholder derivative action is a suit brought by an eligible shareholder on the corporation's behalf to enforce a corporate claim.
Key elements and checks
- A claim belonging to the corporation.
- An eligible shareholder adequately representing its interests.
- Compliance with governing demand and pleading requirements.
In the source’s words
“The claim belongs to the corporation, not the shareholder, and any recovery goes to the corporation.”
Cornell Wex — Shareholder derivative suit
Do not assume every jurisdiction excuses demand as futile or imposes the same waiting period.