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Shareholder Derivative Litigation

Large and small companies, including limited liability companies, have certain duties and relationships amongst and between different constituents such as shareholders, members, managers, officers and directors. Many times an individual or group of individuals can find ways to wield power over minority shareholders in a way that is improper, such as voting themselves an exorbitant pay raise or diverting corporate opportunities to themselves. These actions often times result in damage to the corporation. Minority shareholders (or members of LLCs) can file a lawsuit to protect the corporation from being harmed by improper actions (or can recover damages from harms that have already occurred). Such lawsuits are called shareholder derivative lawsuits and are dictated by specific statutes in Florida. Other names for these type of lawsuits are shareholder oppression lawsuits or corporate waste lawsuits.

The determination of whether a lawsuit is a direct shareholder action or a derivative shareholder action is an important and technical one. A direct shareholder action often involves a claim by a shareholder who suffered special damages and is owed a duty directly (usually as a result of a contract). A business litigation attorney pursuing damages and protections for individual shareholders must make a pre-filing determination as to which type of lawsuit should be filed (or if two separate lawsuits must be filed). Further, there are a number of pre-filing actions which may need to occur prior to filing the lawsuit. Failure to make the proper pre-filing decisions can have significant adverse effects on the outcome of the litigation.

Shareholder derivative litigation is often complex and ever-changing. The recent adoption of the Florida Revised Limited Liability Act creates additional questions and issues which may affect LLCs which become subject to derivative litigation filed by members. At Brick Business Law, we pursue and defend corporations and corporate officers where there are actual or potential shareholder derivate claims and direct shareholder claims. If you are a minority shareholder of a corporation or member of an LLC and you are concerned that another party, such as a corporate officer, has harmed you or your corporation or your LLC, call Brick Business Law for a free consultation. If you are a corporate officer or the majority shareholder of a corporation or LLC and you are being pursued by shareholders or members, call us for a free consultation.

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