Bankruptcy

Directors Of Corporation Cannot Sue Derivatively If They Are Not Shareholders

By Scott Riddle

In the corporate litigation field, the Delaware Supreme Court has held that directors of Delaware corporations, who are not shareholders of the corporation, cannot assert derivative claims against fellow directors.  While this issue may not arise often, it is important as many corporations are governed by Delaware law, and other states follow Delaware law.

The case is Schoon v. Smith, (Del. Supr., Feb. 12, 2008), and you can read about the case on the Delaware Corporate and Litigation Blog, the Harvard Corporate Governance Law Blog (with link to pdf of opinion) and Business Associations Blog.

Full post as published by Georgia Bankruptcy Blog on February 14, 2008 (boomark / email).