[Your Name] [Your Address] [City, State, ZIP Code] [Email Address] [Phone Number] [Date] [Recipient's Name] [Recipient's Designation] [Company Name] [Company Address] [City, State, ZIP Code] Subject: Motion to Dismiss on Shareholder Derivative Claims — North Dakota Shareholder Derivative Action Dear [Recipient's Name], I hope this letter finds you in good health. I am writing to you today on behalf of [Your Company Name] as a shareholder in [Company Name], bringing to your attention the filing of a shareholder derivative action in North Dakota. I have reviewed the aforementioned complaint filed against the directors and officers of [Company Name] and find it to have glaring deficiencies, thus warranting the filing of a Motion to Dismiss to protect the interests of the company and its shareholders. The purpose of this letter is to formally request that a Motion to Dismiss be filed on our behalf. In accordance with North Dakota company law, a shareholder derivative action is a claim that seeks to remedy alleged harm caused to a corporation by its directors or officers through wrongful acts or omissions. However, upon careful examination of the complaint, it becomes evident that the plaintiffs have failed to meet the necessary legal requirements for such claims, thereby necessitating the Motion to Dismiss. The grounds for the Motion to Dismiss can be broadly summarized as: 1. Lack of Standing: The plaintiffs must sufficiently establish their standing as shareholders of the company at the time of the alleged wrongdoing to bring a shareholder derivative action. However, there is a paucity of evidence supporting the plaintiffs' adequate ownership of the company's shares during the relevant period. 2. Failure to Comply with pre-SAT Demand Requirements: Prior to initiating a shareholder derivative action, North Dakota law mandates that the plaintiffs make a demand on the corporation's board of directors to address the alleged wrongdoing themselves. Only when such a demand is wrongfully refused or ignored many shareholders file a derivative action. Regrettably, the complaint fails to demonstrate any such demand being made or refused. 3. Failure to State a Claim: The complaint lacks factual specificity and fails to adequately allege any actionable misconduct by the directors and officers of [Company Name]. The plaintiffs' failure to provide a reasonable basis for their claims renders their assertions deficient in substance and thus warrants dismissal. In light of the above, we kindly request that [Your Company Name]'s legal counsel promptly file a Motion to Dismiss on our behalf in response to the shareholder derivative claim filed in North Dakota. We firmly believe that the court will recognize the shortcomings in the plaintiffs' allegations and take appropriate action to protect the best interests of [Company Name] and its shareholders. We trust your legal team will proceed diligently and keep us informed of any developments or additional documentation required. Should you require any further information, please do not hesitate to contact me at your convenience. Thank you for your attention to this matter. We remain confident in [Your Company Name]'s ability to handle this situation effectively and can only hope for a swift resolution that favors the rightful interests of the company and its shareholders. Yours sincerely, [Your Name]
North Dakota Sample Letter regarding Motion to Dismiss on Shareholder Derivative Claims
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How to fill out Sample Letter Regarding Motion To Dismiss On Shareholder Derivative Claims?
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FAQ
Commonly, derivative suits allege improper actions by those in charge of the entity including, self-dealing by those in charge, entity mismanagement, or breaches of the duties of loyalty and care owed to the entity and the entity's owners. Direct claims are those seeking redress to the individual directly.
If the committee's suggestion is to support the action, then the board will likely enter the suit and take up the action against the directors who have pursued or are pursuing the illegal or improper course of conduct.
Make a demand in writing requiring the corporation to take suitable action before the action (Generally, a derivative suit can only be filed 90 days after written demand. But it may be initiated ahead of time if a) the corporation rejects the demand, or b) the corporation will suffer irreparable harm if they wait).
Still, derivative action involves a wrong against the corporation and not individual shareholders; therefore, damages do not go to the shareholders personally but to the corporation itself. However, shareholders often bring derivative suits because they stand to indirectly gain from winning a derivative suit.
What is the difference between a stockholder's derivative suit and a class action? A derivative lawsuit is brought by a shareholder of a corporation for the benefit of the corporation. A shareholder's class action lawsuit is brought by a shareholder for the benefit of themselves and the other shareholders.
A derivative action is brought by a shareholder on behalf of the company; this means that if a derivative action is successful, any damages awarded are awarded to the company and not the shareholder(s) who brought it.
Remedies commonly sought in derivative actions include corporate governance reforms designed to prevent future fiduciary misconduct, the removal of officers or directors whose misconduct injured the corporation, monetary payments to remedy damages incurred by the company, and repayment of funds obtained illegally.
Derivative claim remedies Damages payable to the company from the director(s) held to be at fault. An injunction to prevent the director(s) at fault against taking any further unlawful action/committing any further breaches. The setting aside of transactions which have personally benefitted the director(s) at fault.
Derivative claim remedies Damages payable to the company from the director(s) held to be at fault. An injunction to prevent the director(s) at fault against taking any further unlawful action/committing any further breaches. The setting aside of transactions which have personally benefitted the director(s) at fault.
