Derivative Action
Legal Definition and Related Resources of Derivative Action
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Meanings, Synonyms, Etymology, Translations and More
Meaning of Derivative Action
One which a person may institute to redress a wrong done to another. The term is generally used to denote an action in which the grievance to be redressed has been suffered primarily by a corporation and where normally the corporation should institute the action but where it fails or refuses to act after demand. In such a case a stockholder may institute the action as representing the corporation. See Reed v Norman, 314 P.2d 204, 152 C.A.2d543.
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Derivative Action in Historical Law
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Stockholder's Derivative Action in the American legal Encyclopedia
Shareholder's Derivative Action in the American legal Encyclopedia
A suit brought by a shareholder on behalf of the ... (Read more)
English Legal System: Derivative Action
In the context of the English law, A Dictionary of Law provides the following legal concept of Derivative Action: Civil proceedings brought by a minority of company members in their own names seeking a remedy for the company in respect of a wrong done to it. Such proceedings are exceptional; usually an action should be brought by the company (the injured party) in its own name. A derivative action will only be permitted when a serious wrong to the company is involved, which cannot be ratified by an ordinary resolution of company members (e.g. an *ultra vires or illegal act or a case of *fraud on the minority) and the majority of members will not sanction an action in the company's name.
Compare representative action.
Meaning of Derivative Action
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Derivative Action