What is the Difference Between Derivative and Direct Shareholder Lawsuits?

By mlgbusinesslit, In Business Law, 0 Comments

What is the difference between a direct lawsuit and a derivative lawsuit?

MLG Business Litigation Group, our Florida shareholder dispute attorneys know that to prevent or remedy a wrong either on behalf of a corporation or to protect that shareholder’s ownership and interests, lawsuits may become part of the professional landscape.

Our Florida business litigation attorneys help shareholders determine whether to bring a derivative lawsuit or a direct lawsuit against the corporation.

What is the Difference Between a Derivative and Direct Lawsuit in Florida?

In the simplest terms, a derivative lawsuit allows shareholders to seek restitution on behalf of the corporation, acting on behalf of the company because those in control failed to assert a claim against a liable person or party that caused the company harm.

Derivative lawsuits often allege improper actions by those in charge of the entity, which may include:

  • Self-dealing
  • Entity mismanagement
  • Breaches of the duties of loyalty and care owed to the corporation and its shareholders

However, the shareholder cannot bring a lawsuit unless and until the entity fails to act on its own behalf.

Conversely, a direct lawsuit is the result of a shareholder bringing a claim based on their individual ownership of shares in the corporation.

Direct claims are those seeking legal remedies to the individual directly, and may involve:

  • Contract rights related to shares
  • Inability to vote on a particular entity action
  • Rights to review the records of the corporation
  • Rights related to the recovery of dividends

Shareholder disputes can be complex without a skilled Florida business litigation attorney by your side. We can help you determine which approach is right for your unique needs, so you can pursue the legal remedy and outcome you deserve.

Contact MLG Business Litigation Group in Florida for a Free Case Assessment Today

If you are embroiled in a shareholder dispute and are unsure of what action to take against the corporation, Contact our MLG Business Litigation Group attorneys in Florida today at 888-904-2524 for a free case evaluation. We can help you understand your complete legal rights and options to develop a successful approach to pursue tangible results.

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