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CALIFORNIA CORPORATE & SECURITIES LAW

Compromising and Settling of Derivative Suits In California

When a shareholder sues derivatively, the shareholder is seeking relief not for itself, but for the corporation.  Therefore, it should be expected that the shareholder is not free to compromise or dismiss the suit absent court oversight.  For example, Rule 23.1 of the Federal Rules of Civil Procedure provides: A derivative action may be settled, voluntarily…

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Court Sorts Out California RULLCA Transition Muddle

Yesterday, I wrote about Kennedy v. Kennedy, 2015 Cal. App. LEXIS 329 (Apr. 20, 2015).  That post discussed the Court of Appeal’s holding that under the General Corporation Law the dismissal of a cause of action for involuntary dissolution with prejudice vitiates any right to buy out the shareholder seeking dissolution.  The plaintiff, however, also…

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Dismissal Of Involuntary Dissolution Action Pulls The Plug On Corporate Buy Out

Sometimes, shareholders are divided on whether a corporation should live or die.  In these cases, the California Corporations Code provides an option that allows for the continued existence of a corporation.  In any action for involuntary dissolution, or in any proceeding for voluntary dissolution initiated by the vote of shareholders representing only 50% of the voting…

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