special litigation committee SLC

A board of directors, when challenged by a shareholder derivative litigation, may appoint an independent special litigation committee to consider whether the corporation's best interest is to pursue or terminate the derivative litigation against the directors.

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The special litigation committee (SLC) is a last chance for a corporation to control a derivative claim when a majority of its directors cannot impartially consider the demand. The board vests its power to determine what to do with the suit to a committee of independent directors. Generally, if the SLC recommends terminating the derivative suit, the court will defer to the recommendation if the committee shows that its members were independent, acted in good faith, and had a reasonable basis for their conclusions.