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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.

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 …

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.