Aaron Hall is an experienced shareholder’s derivative suit attorney in Minnesota. As an attorney who is licensed and admitted in Minnesota state and federal court, Mr. Hall is experienced in representing shareholders and corporations in a variety of corporate law claims including breach of fiduciary duty, violation of shareholders’ reasonable expectations, fraud, self-dealing, unfair prejudice, corporate waste, wrongful termination of a shareholder’s employment, violations of Minnesota Statutes section 302A.751, and other illegal corporate actions.
What is a Shareholder’s Derivative Suit?
A shareholder’s derivative suit is a lawsuit brought by a minority shareholder (not in control of the company) against the officers or directors of a corporation for misusing the corporation or its assets. In shareholder’s derivative suits, the officers or directors are often the controlling shareholders (controlling over 50% of the shares of stock in the corporation).
Often, shareholder’s derivative suits appear in small, closely-held corporations (corporations few shareholders, with shares not traded on a stock exchange, where the officers and directors are also the controlling shareholders).
What are Shareholder’s Duties in a Corporation?
There are two types of violations that underlie shareholder’s derivative lawsuits: duty of care and duty of loyalty. Shareholders often find that breach of duty of loyalty is easier to prove. That is, it’s easier to show that a director or officer acted in their own self-interest than to prove that a director or officer acted with gross negligence or intent to harm the corporation.
What will Courts consider in a Shareholder’s Derivative Suit?
In determining whether to order the relief requested by a shareholder, a Minnesota court will consider the duty that all shareholders owe one another to act in an honest, fair, and reasonable manner in the operation of the corporation and the reasonable expectations of all shareholders as they exist at the inception and develop during the course of the shareholders’ relationship with the corporation and with each other. This standard is found in Minnesota Statutes section 302A.751 subd. 3a.
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