The Derivative Suit Self-Quiz

 

 

 

 

 

 

 

Several shareholders, after a recent disclosure of fraud on the part of the corporation’s directors, have decided to sue the corporation. Such a suit is known as a:
Choice 1 strike suit.
Choice 2 class action suit.
Choice 3 litigation suit.
Choice 4 derivative action suit.
Prior to filing a derivative action suit, the litigant shareholder must perform which of the following actions?
Choice 1 notify all of the shareholders regarding their choice to opt out of the suit.
Choice 2 request the board to cease and desist and/or file the action themselves.
Choice 3 file a claim in the local court for a temporary restraining order.
Choice 4 nothing, as the shareholders are entitled to file their suit without further ado.
If shareholders win the action in a derivative action suit, what is the likely result?
Choice 1 The company must pay the shareholders whatever damages the court imposes.
Choice 2 The directors must pay the shareholders whatever damages the court imposes.
Choice 3 The directors must pay the company whatever damages the court imposes.
Choice 4 The company must pay the shareholders' legal fees.

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