(a) A proceeding may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by:

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Terms Used In Tennessee Code 48-56-401

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Class: when used with reference to membership interests, means a category of membership interests that differs in one (1) or more rights or preferences from another category of membership interests of the LLC. See Tennessee Code 48-202-101
  • Complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
  • Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
  • Directors: means natural persons, designated in the charter or bylaws or elected or appointed by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which such persons are described. See Tennessee Code 48-51-201
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Mutual benefit corporation: means a domestic corporation which becomes by operation of law a mutual benefit corporation pursuant to §. See Tennessee Code 48-51-201
  • Plaintiff: The person who files the complaint in a civil lawsuit.
  • Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Tennessee Code 48-202-101
  • Public benefit corporation: means a domestic corporation which becomes by operation of law a public benefit corporation pursuant to §. See Tennessee Code 48-51-201
  • Reporter: Makes a record of court proceedings and prepares a transcript, and also publishes the court's opinions or decisions (in the courts of appeals).
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
  • Termination: means the end of an LLC's existence as a legal entity and occurs when the articles of termination are filed with the secretary of state under §. See Tennessee Code 48-202-101
  • Voting power: means the total number of votes entitled to be cast for the election of directors at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event that has not occurred at the time. See Tennessee Code 48-51-201
(1) Any member or members having five percent (5%) or more of the voting power or by fifty (50) members, whichever is less; or
(2) Any director.
(b) In any such proceeding, each plaintiff shall be a member or director at the time of bringing the proceeding.
(c) A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made, if any, to obtain action by the directors and either why the plaintiffs could not obtain the action or why they did not make the demand. If a demand for action was made and the corporation’s investigation of the demand is in progress when the proceeding is filed, the court may stay the suit until the investigation is completed.
(d) A proceeding commenced under this section may not be discontinued or settled without the court’s approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interest of the corporation’s members or a class of members, the court shall direct that notice be given the members affected. If notice is so directed to be given, the court may determine which party or parties to the suit shall bear the expense of giving such notice, in such proportion as the court finds to be reasonable in the circumstances, and the amount of such expense shall be awarded as special costs of the suit and recoverable in the same manner as other taxable costs.
(e) On termination of the proceeding, the court may require the plaintiffs to pay any defendant‘s reasonable expenses (including counsel fees) incurred in defending the suit if it finds that the proceeding was commenced frivolously or in bad faith.
(f) If the proceeding on behalf of the corporation results in the corporation taking some action requested by the plaintiffs or otherwise was successful, in whole or in part, or if anything was received by the plaintiffs as a result of a judgment, compromise, or settlement of an action or claim, the court may award the plaintiffs reasonable expenses (including counsel fees).
(g) The plaintiffs shall notify the attorney general and reporter within ten (10) days after commencing any proceedings under this section if the proceeding involves a public benefit corporation or assets held in charitable trust by a mutual benefit corporation.
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