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December 14, 1819

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Questions about Derivative Cases


1. What is a shareholder derivative case?
A shareholder derivative case is a lawsuit where a
shareholder asserts the legal rights of a Company where
Company Executives refuse to assert the Company's own
rights and their refusal harms the shareholders.

2. Why would a Company's Executives fail to assert the legal
rights of the Company?
There are varying examples, most dealing with Company
Executives failing to assert the Company's rights because the
Executives themselves are profiting from the wrongdoing.
One common type of shareholder derivative suit occurs
' when Company Executives steal money from the Company.
The Executives will not act on the Company's behalf to
remedy the theft because they themselves are the thieves.
The shareholders therefore must act to remedy the situation.


3. How does a shareholder derivative suit help the
shareholders?
By forcing the Company's executives to recompense the
Company for their wrongful actions, the shareholders
increase the value of their shares. Additionally, the
shareholders may force changes in corporate governance to
prevent a similar event from occurring in the future.

4. What is expected of me if I file a lawsuit?
You must agree to keep at least a few shares of stock until
the end of the litigation.

5. How long does the the litigation take?
Generally, the litigation takes 2-3 years.

6. Does it cost me anything to file a lawsuit?
No. The Law Offices of Howard G. Smith will never ask you
for any money and will cover any cost or expense of litigation
from its own funds.

 

 

 

 

 

 

 

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