Texas Business Organizations Code 21.558 – Dismissal of Derivative Proceeding
(a) A court, sitting in equity as the finder of fact, shall dismiss a derivative proceeding on a motion by the corporation if the person or group of persons described by § 21.554 determines in good faith, after conducting a reasonable inquiry and based on factors the person or group considers appropriate under the circumstances, that continuation of the derivative proceeding is not in the best interests of the corporation.
(b) In determining whether the requirements of Subsection (a) have been met, the burden of proof shall be on:
(1) the plaintiff shareholder if:
(A) the majority of the board of directors consists of independent and disinterested directors at the time the determination is made;
(B) the determination is made by a panel of one or more independent and disinterested persons appointed under § 21.554(a)(3); or
(C) the corporation presents prima facie evidence that demonstrates that the applicable person or persons making the determination under § 21.554(a) are independent and disinterested; or
(2) the corporation in any other circumstance.
Terms Used In Texas Business Organizations Code 21.558
- 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.
- Corporation: means an entity governed as a corporation under Title 2 or 7. See Texas Business Organizations Code 1.002
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Person: means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity. See Texas Business Organizations Code 1.002
- Plaintiff: The person who files the complaint in a civil lawsuit.