Double Derivative Claims Fall Flat Post-Merger

Law360 (April 13, 2010, 1:22 PM EDT) -- Experienced corporate governance litigators have long known that if a Delaware corporation merges during the pendency of a derivative suit, the merger leads to a dismissal of that derivative suit. The reason is simple — standing to bring any derivative suit requires the named shareholder to possess and maintain "continuous ownership" of stock in the corporation on whose behalf he is suing.

This includes ownership at the time of the alleged wrong or transaction at issue, when the suit was commenced, and throughout the course of the litigation. See 8 Del. C. § 327; Del. Ch. Ct. R. 23.1 Once a...

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