Only Shareholders Can File Derivative Suits: Court

Law360, New York (February 14, 2008, 12:00 AM EST) -- Directors of a Delaware company looking to file derivative suits against their fellow board members are out of luck if they don't hold company stock. The Delaware Supreme Court, upholding an earlier decision by the Delaware Court of Chancery, has ruled that directors must also be shareholders of the company in order to initiate derivative litigation.

The court declined to extend equitable standing, which gives stockholders the right to bring an action on behalf of a company, on the grounds that the plaintiff had not proven...
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