Law Commons^™

Shareholders Do Not Have Standing To Bring An Individual Action Against Third Parties Who Have Damaged The Corporation: Adair V. Wozniak, Frank Carrino

Akron Law Review

Apart from the context of a derivative action, can a shareholder in a corporation sue individually for wrongful acts committed against the corporation by third parties?

The general rule of corporate law states that a shareholder cannot attain standing for such a suit. This rule is grounded on the theory that all shareholders should incur loss from third party wrongdoing in proportion to the amount of shares he or she holds, and likewise should proportionately benefit when the corporate entity wins an action. In addition, courts are fearful that if this rule were not in force, then there would be …

Statutory Limits On A Corporation's Right To Make Distributions To Shareholders: The Law Of Distribution In The 1984 Revised Model Business Corporation Act, Philip Mcgough

Akron Law Review

The purpose of this paper is to review the law of distribution in the 1984 Model Business Corporation Act. As we shall see, the 1950 MBCA's basic stance was that distributions should be made from earnings and that any distribution from contributed capital should require notification and approval of shareholders. The 1984 MBCA rejects the original stance and provides for minimal restrictions on distributions. What follows is in two parts: the first is a general survey of the law of distribution, the second compares the 1950 and 1984 versions of the MBCA in how they regulate distributions to shareholders.

Alternative Relief Available To Dissenting Shareholders Of A Cash-Out Merger, Edwin Davila

Akron Law Review

This article relates to the standing and right of a minority shareholder, who has dissented from a cash-out merger and commenced an appraisal proceeding, to pursue a separate individual claim of fraud in the merger through an action for rescissory damages against the participants for breaches of fiduciary duties to the shareholder. This issue arises from a cash-out merger of the minority shareholder. The situation encompasses two suits: a first filed statutory appraisal proceeding (the "Appraisal Action"); and a later filed shareholder's individual suit for damages for alleged fraud, conspiracy, self-dealing and waste of corporate assets (the "Fraud Action").