Securities,
Corporate,
Civil Litigation
Dec. 15, 2020
Derivative actions help shareholders in small companies, too
Recent mega settlements demonstrate the vitality of derivative actions involving large, publicly traded companies; however, derivative actions are also essential for the protection of small, privately held companies.
Brian Danitz
Partner
Cotchett, Pitre & McCarthy LLP
Class actions, shareholder suits and business litigation
SF Airport Office Center, 840 Malcolm Rd
Burlingame , CA 94010
Email: bdanitz@cpmlegal.com
Fordham Univ SOL; New York NY
A derivative action allows an individual shareholder to step into the shoes of the company to protect it from faithless officers and directors who by law are fiduciaries. Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991). As stated by the California Supreme Court, "shareholders may ... bring a derivative suit to enforce the corporation's rights and redress its injuries when the board of directors fails or refuses to do so."
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