Bringing a Derivative Lawsuit for Shareholder Oppression

Steps to a Shareholder Derivative Action

Some of the steps involved in minority shareholder derivative actions:

• Investigation - The shareholder plaintiff investigates and gathers evidence to support claims of harm done to the corporation.
• Demand - The plaintiff makes a written demand to the board of directors requesting that the corporation directly pursue the claims.
• Board response - The corporation may accept the demand and pursue claims or reject it as not in the company's interests.
• Filing complaint - If demand rejected, the plaintiff files a derivative lawsuit complaint on behalf of the company against parties allegedly harming it.
• Overcoming defenses - Defendants may try to dismiss the case based on plaintiff's lack of standing, failure to satisfy demand, or deference to board's business judgment.
• Discovery - Plaintiff conducts discovery including depositions, documents requests, interrogatories to gather evidence to prove claims.
• Resolution - The case may settle out of court or proceed to trial. Alternatively, the corporation may form a special litigation committee which seeks to dismiss the case.
• Remedies - If successful, remedies like damages or governance reforms are awarded to the injured corporation.
• Attorney fees - Plaintiff's legal costs may be paid out of any monetary recovery awarded to the company.

The process aims to remedy and deter corporate malfeasance but can be complex. Counsel is advisable.

Hopkins Centrich Law, Your Shareholder Oppression Law Firm

Hopkins Centrich Law provides cutting-edge, high-quality, creative legal solutions for minority shareholders in Texas Closely Held Corporations when their rights have been abused by the majority owners. Our attorneys and staff have decades of experience in virtually every aspect of business law in The Woodlands and Texas. We have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, managed mergers, acquisitions, and sales.

Hopkins Centrich Law knows Texas business law. We are uniquely positioned to help shareholders when they have ample cause to believe their rights are being violated. When we work with a client, our sole focus is on them. We take advantage of everything technology has to offer in order to optimize how we work. That gives us more time to spend with you, more time to understand the issues, and more time to negotiate and prepare for trial.

We get that no one wants to contact a law firm unless they feel they absolutely have to. When they do, it almost always means that ‘things have reached a head.’ The attorneys and staff of Hopkins Centrich Law understand what you are going through. We will make the process understandable; you will know what is happening with your case every step of the way, and you will never have to track us down for answers.

What to Do If You Think Your Minority Rights are Being Violated

First, do not believe anything you read online, or listen to someone who tells you that the Texas Supreme Court did away with Shareholder Oppression lawsuits. The Court merely limited some of the basis for bringing a Shareholder Oppression action. There are still many avenues to relief available, particularly where the majority shareholders have made decisions that are not In the best interests of the business.

Don’t wait. If you think your shareholder rights have been trampled on don’t hesitate to call. Don’t hope that things change, don’t let a matter fester, don’t try to solve the problem yourself through emails and letters and not-so-calm conversations. Contact us. The earlier you do, the better, there are deadlines for every legal action. The longer you wait, the fewer your legal options.