BULLET NOTES IN COMMERCIAL LAW REVIEWER FOR THE 2014 OCTOBER BAR EXAMS:A derivative action is a suit by a shareholder to enforce a corporate cause of action. It is a remedy designed by equity and has been the principal defense of the minority shareholders against abuses by the majority. For this purpose, it is enough that a member or a minority of stockholders file a derivative suit for and in behalf of a corporation. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stock in order to protect or vindicate corporate rights, whenever officials of the corporation refuse to sue or are the ones to be sued or hold the control of the corporation. In such actions, the suing stockholder is regarded as the nominal party, with the corporation as the party in interest.(TACORDA BIDO BERNABE DELA VEGA NAPAY-LITUSQUEN ISIDORO & ABAD FILES 2014)
Posted on: Tue, 14 Oct 2014 04:32:02 +0000