§ 626 — Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor

New York § 626

• Jurisdiction: New York
• Law BSC: Business Corporation
• Art. 6: Shareholders

Text

§ 626. Shareholders' derivative action brought in the right of the\n corporation to procure a judgment in its favor.\n (a) An action may be brought in the right of a domestic or foreign\ncorporation to procure a judgment in its favor, by a holder of shares or\nof voting trust certificates of the corporation or of a beneficial\ninterest in such shares or certificates.\n (b) In any such action, it shall be made to appear that the plaintiff\nis such a holder at the time of bringing the action and that he was such\na holder at the time of the transaction of which he complains, or that\nhis shares or his interest therein devolved upon him by operation of\nlaw.\n (c) In any such action, the complaint shall set forth with\nparticularity the efforts of the plaintiff to secure the initiation of\nsuch action by the board or the reasons for not making such effort.\n (d) Such action shall not be discontinued, compromised or settled,\nwithout the approval of the court having jurisdiction of the action. If\nthe court shall determine that the interests of the shareholders or any\nclass or classes thereof will be substantially affected by such\ndiscontinuance, compromise, or settlement, the court, in its discretion,\nmay direct that notice, by publication or otherwise, shall be given to\nthe shareholders or class or classes thereof whose interests it\ndetermines will be so affected; if notice is so directed to be given,\nthe court may determine which one or more of the parties to the action\nshall bear the expense of giving the same, in such amount as the court\nshall determine and find to be reasonable in the circumstances, and the\namount of such expense shall be awarded as special costs of the action\nand recoverable in the same manner as statutory taxable costs.\n (e) If the action on behalf of the corporation was successful, in\nwhole or in part, or if anything was received by the plaintiff or\nplaintiffs or a claimant or claimants as the result of a judgment,\ncompromise or settlement of an action or claim, the court may award the\nplaintiff or plaintiffs, claimant or claimants, reasonable expenses,\nincluding reasonable attorney's fees, and shall direct him or them to\naccount to the corporation for the remainder of the proceeds so received\nby him or them. This paragraph shall not apply to any judgment rendered\nfor the benefit of injured shareholders only and limited to a recovery\nof the loss or damage sustained by them.\n