Four Criteria You Must Meet to Be a Plaintiff in a Shareholder Derivative Lawsuit in Florida
A shareholder derivative lawsuit is a legal cause of action filed by a shareholder (or group of shareholders) on behalf of the corporation itself. Most often, it is a type of claim that is pursued against officers, directors, or other top leaders of the company. To move forward with a shareholder derivative action, there are certain legal and procedural requirements that must be met. Here, our Miami shareholder derivative lawsuit attorney highlights four key criteria that you must satisfy in order to be eligible to be the plaintiff in a derivative action in Florida.
- Be a Shareholder at the Time of the Underlying Matter
The first criterion to meet in filing a shareholder derivative lawsuit in Florida is that you must have been a shareholder at the time the alleged wrong occurred. It is a legal requirement that ensures that only those directly impacted by the malfeasance or nonfeasance have standing to initiate a derivative action. While it may seem self-evident, it is fundamental in providing the legitimacy to proceed with the lawsuit.
- Remain a Shareholder Throughout the Course of the Dispute
The second criterion is that you must remain a shareholder throughout the entire course of the dispute. This continuity of ownership is paramount for ensuring that the person seeking justice maintains a vested interest in the resolution of the case. If a plaintiff ceases to be a shareholder during the litigation process, for instance, through the sale of their shares, they may lose their standing to sue. Another party would be better suited as the plaintiff.
- Fairly and Properly Represent the Interests of Similarly Situated Shareholders
Plaintiffs in a shareholder derivative lawsuit must fairly and adequately represent the interests of similarly situated shareholders. This criterion ensures that the lawsuit is not driven by personal motivations or interests, but genuinely serves the collective interest of all shareholders. The court will assess the plaintiff’s suitability to represent other shareholders based on their demonstrated dedication to the corporation, understanding of the lawsuit, and their ability to make decisions that benefit all shareholders.
- Make a Demand in Writing or Otherwise Satisfy Florida’s Demand Futility Statute
Florida is a demand futility state for shareholder derivative claims. The final criterion to meet is that the plaintiff should make a formal demand in writing to the corporation’s board of directors, expressing their intention to file a derivative suit, or satisfy the demand futility statute. The statute can be satisfied by showing that making a demand to the board would be futile because the directors are biased or otherwise incapable of making an unbiased decision. The formal demand allows the corporation to address the alleged wrong internally before litigation is pursued, while satisfying the demand futility statute justifies bypassing this step.
Get Help From a Miami Shareholder Derivative Lawsuit Attorney Today
At Pike & Lustig, LLP, our Miami shareholder dispute attorney has the skills, experience, and legal expertise to handle the full range of shareholder derivative cases. Have questions about your rights or your options under the law? We are here as a legal and professional resource. Contact us today to set up your fully confidential initial consultation. With offices in Miami and West Palm Beach, our commercial lawyers are well-situated to handle shareholder derivative lawsuits throughout Florida.