Are you a concerned corporate shareholder wondering how to bring a derivative lawsuit in San Diego? What is a derivative lawsuit and when is this an important strategy to consider? Corporate shareholders with voting shares are in a position of ownership in a C-Corporation, S-Corporation or California Professional Corporation or PC. They may be what is called the “majority” interest or they may be considered to be a “minority” shareholder.
The majority interest in a corporation is the individual or group of shareholders who own enough of the corporate shares in that company to have the controlling interest. They hold the power to influence or outright decide the majority of the decisions associated with the company, its leadership, distribution of income and selection of leadership. Minority shareholders may hold a significant percentage of the outstanding shares of the corporation, but neither a majority of the outstanding shares or the associated voting privileges. When an investor purchases an interest in a corporation, they are usually given shares in the company based upon the value of their investment. In many cases these shares provide the minority interest with the ability to influence some decisions, or perhaps to name one or two of the Corporate Directors but they cannot make important decisions regarding the payment of salaries to corporate officers and directors, distributions or the direction of the company.
When a shareholder is concerned about the actions of a corporate officer or director, or the direction of the company itself they are entitled to bring a “derivative lawsuit” on behalf of the company itself against the majority interests – those making the decisions. Many shareholders have no idea how to bring a derivative lawsuit or how they work. Generally speaking the corporation itself files a lawsuit against the directors or officers. The corporation must have a cause of action and the financial damages resulting from the derivative lawsuit are given to the corporation itself, not the shareholder who brought the action.
The Watkins Firm are corporate attorneys and business litigation lawyers with decades of experience and expertise in derivative lawsuits and shareholder’s rights here in San Diego. If you are a shareholder who is concerned about the direction of the company or are experiencing bullying from majority shareholders such as a “freeze out” (denial of access to the books or important corporate documents) or improper distributions we invite you to contact us for a free consultation at 858-535-1511.