Legal Definition of derivative action
— called also derivative suit, shareholder's derivative suit— compare direct action sense 2
Note: A shareholder or member bringing a derivative action must describe in the complaint attempts to obtain action from the corporate directors or association authorities, or from other shareholders or members, and the reasons these attempts failed. The plaintiff must fairly and adequately represent the other similarly situated shareholders or members, and the action may not be collusive. Federal Rule of Civil Procedure 23.1 governs derivative actions brought in federal court.
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