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Derivative Lawsuits

Derivative Lawsuits

Definition

A type of lawsuit brought by one or more stockholders, on behalf of the corporation, alleging financial loss to the organization. The alleged harm must be to the corporation as a whole, such as the diminishing of the corporation's assets, for shareholders to pursue an action derivatively. Any recovery in such suits inures to the benefit of the corporation itself as opposed to the shareholders who institute the action.

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