Vermont Statutes Title 11 Sec. 7-40
Terms Used In Vermont Statutes Title 11 Sec. 7-40
- 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.
- Domestic: when applied to a corporation, company, association, or copartnership shall mean organized under the laws of this State; "foreign" when so applied, shall mean organized under the laws of another state, government, or country. See
- Person: includes individual and entity. See
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See
- 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.
- Shareholder: means the person in whose name shares are registered in the records of a corporation or upon presentation for registration are entitled to be registered in the records of a corporation. See
§ 7.40. Procedure in derivative proceedings
(a) A person may not commence a proceeding in the right of a domestic or foreign corporation unless such person was a shareholder of the corporation when the transaction complained of occurred or unless such person became a shareholder through transfer by operation of law from one who was a shareholder at that time.
(b) 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 board of directors and either that the demand was refused or ignored or why he or she did not make the demand. Whether or not a demand for action was made, if the corporation commences an investigation of the charges made in the demand or complaint, the court may stay any proceeding until the investigation is completed.
(c) 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 shareholders or a class of shareholders, the court shall direct that notice be given the shareholders affected.
(d) For purposes of this section, “shareholder” includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the shareholder’s behalf. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)