What Do I Need To Do Before Filing A Shareholder Lawsuit?
As a minority shareholder, you must rely on other people to manage and protect your investment. In some cases, majority shareholders and/or corporate officers and directors could damage your financial interests through fraud, gross negligence, or other improper conduct. You may be entitled to relief through a shareholder lawsuit.
Shareholder litigation is complex. It is a technical, highly specialized area of law. Taking successful legal action as a minority shareholder requires putting yourself in the best position. In this article, our Miami shareholder litigation lawyers highlight some of the key things that you need to do before filing a shareholder lawsuit in Florida.
- Know What Type of Shareholder Claim You are Filing
As a starting point, you need to know what type of shareholder claim you are making. There are two main types: direct action and derivative action. A direct action is filed by a shareholder to seek relief for harm done directly to them by the company. On the other hand, a derivative claim is filed by a shareholder on behalf of the company to seek relief for harm done to the company.
- Direct Action Claims Require Asserting a ‘Special Injury’
When filing a direct action shareholder claim, the shareholder must assert that they have suffered a “special injury” that is distinct from the harm suffered by other shareholders. Put another way, the individual shareholder must be prepared to demonstrate that they have been personally harmed in a different way than other shareholders. If this requirement is not met, the claim may be dismissed.
- Derivative Claims Require Proving Demand Futility
In Florida—and other states, including Delaware and Nevada—there are special procedural requirements for shareholder derivative lawsuits. In order to file a shareholder derivative claim, the plaintiff must first prove that making a demand on the company’s board of directors to take action on the matter would be futile. In general, this require proving that:
- A demand has already been made and has been ignored or not properly addressed; or
- A demand does not need to be made because the Board would obviously not take action.
- A Shareholder Litigation Attorney WIll Help You Build a Case to Support Your Claim
A shareholder litigation attorney can help a shareholder build a strong case to support their claim, whether it’s a direct action or derivative claim. In most shareholder disputes, the defense will move for an immediate dismissal. To survive a motion to dismiss, it is imperative that the plaintiff(s) is able to present strong, comprehensive, and well-supported allegations of improper conduct by a majority shareholder, the Board of Directors, and/or corporate officers.
Set Up a Completely Confidential Consultation With a West Palm Beach Shareholder Lawyer
At Pike & Lustig, LLP, we are devoted to providing solutions-forward legal representation. If you have any specific questions about the steps that you need to take before filing a shareholder lawsuit, we are here as a legal resource. Give us a call today for your confidential consultation. We provide shareholder dispute representation in Miami, West Palm Beach, and throughout Southeast Florida.
