What is a derivative lawsuit and how can you protect your company with a derivative lawsuit in San Diego or Southern California? What are the rights of a minority shareholder in San Diego and across California? What should you do if you are concerned about the direction of the corporation or the decisions of executive management or the Board of Directors?
What is a Derivative Lawsuit
A derivative lawsuit is brought by a shareholder or group of shareholders against the executives, majority interest or the Board of Directors of a corporation. The lawsuit is actually brought on behalf of the corporation against its management in response to poor management, violation of duties or other actions which have damaged or reduced the value of a shareholder’s interest in the corporation.
A derivative lawsuit stands up for what is best for the corporation and protects the company while asserting your rights as a minority shareholder.
How Does a Derivative Lawsuit Work?
In a derivative lawsuit the minority shareholder(s) essentially legally step into the shoes of the Board of Directors to protect the corporation itself from mismanagement or violations of fiduciary duties. The lawsuit is filed on behalf of the corporation and all financial proceeds are given to the corporation itself. You can protect your company with a derivative lawsuit and enhance your minority position in several ways:
- It puts power and authority behind your position as a minority shareholder and forces those in the majority or executive leadership to take your position(s) seriously
- It can put an immediate stop to abuses of power, violations of fiduciary duty and other actions which threaten the present or future success of the corporation
- It will open the door to a negotiated settlement to correct the issues at hand or provide an exit strategy which protects or enhances the value of your minority position
- The derivative lawsuit is often compared to a class action in that the shareholder who files the lawsuit is required to provide notice to all other shareholders (at the expense of the corporation) regarding the purpose of the lawsuit and what it is intended to accomplish. This provides other shareholders with the opportunity to join the lawsuit.
How Can the Watkins Firm Help to Protect Your Company with a Derivative Lawsuit
The experienced shareholder dispute attorneys at the Watkins Firm have decades of experience in derivative lawsuits and shareholder disputes here in San Diego. We have managed substantial derivative lawsuit work in San Diego and are prepared to counsel and represent area shareholders. The derivative lawsuit allows shareholders to recover lost value in their corporate interest in the form of financial damages. These financial damages are given to the corporation itself and not to the shareholders who brought the derivative lawsuit against the company, less the legal fees and expenses borne by the shareholder(s) who bring the action.
Shareholder derivative lawsuits are quite legally complicated, and there are other alternatives to resolve disputes between shareholders in a corporation. The Watkins Firm takes a unique approach tor resolve these disputes in a timely and cost-effective manner. When initial tactics are unsuccessful in accomplishing your goals, or when the actions of the majority interests or Directors are placing the corporation at risk you must protect your company with a derivative lawsuit in San Diego or anywhere in California.
We invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
