stockholders' derivative action
DESCRIPTION
Business Law Power Point Presentation about ultra vires and derivative action. Daggett Industries wanted to go into a new line of business but would some of the stockholders object?TRANSCRIPT
Cosmetic Skin Care Industry
2011 = $100,000,000,000 in profits
1% = $1,000,000,000 of profits
Objection by some shareholders
Derivative actionUltra Vires
Ultra vires is Latin for “beyond the powers of.”
Derivative actionUltra Vires
NCGS § 55-2-02(b)(2)(2001)
Deviation: a change from a customary or agreed upon course of action.
“In name only.”
NOMINAL
…unless where a stockholder alleges demand upon and refusal by the
corporation to institute the action to redress the wrong.
Baker v. Data Dynamics Inc.,561 F. Supp. 1161 (1983)
Norman v. Nash Johnson and Sons’ Farms, Inc., 537 S.E. 248, (2000)
The corporation The stockholder
WHO SUFFERED THE ALLEGED HARM?
Cabaniss v. Deutsche Bank Securities,
611 S.E. 2d 878 (2005)
Aubin v. Susi, 560 S.E. 2d 875 (2002); Outen v. Mical, 454 S.E. 2d 883 (1995)
…discontinuance, compromise, or settlement of action.
Alford v. Shaw, 358 S.E. 2d 323 (1987)
Brinson v. Mills Supply Co., 14 S.E. 2d 505 (1941)
Lee v. Wake County, 598 S.E. 2d 427 (2004)
Victor v. Chadwick Mfg. Co., 61 S.E. 653 (1908)
Snow Hill Banking & Trust Co. v. D.J. Odom Drug Co., 125 S.E. 394 (1924)
Kerr v. Hicks, 70 S.E. 486 (1911)
NO!
North Carolina Attorney General Roy A. Cooper
NCGS § 55-14-30
In conclusion…
Inform the stockholder to get the majority to amend the articles of incorporation to broaden Daggett Industries’ purpose.
NCGS 55-10-03