Virginia Code 13.1-672.4: Dismissal
A. A derivative proceeding shall be dismissed by the court on motion by the corporation if one of the groups specified in subsection B or E has:
Terms Used In Virginia Code 13.1-672.4
- Allegation: something that someone says happened.
- 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.
- Derivative proceeding: means a civil suit in the right of a domestic corporation or, to the extent provided in Article 8. See Virginia Code 13.1-603
- Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
- Plaintiff: The person who files the complaint in a civil lawsuit.
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Virginia Code 13.1-603
- Quorum: The number of legislators that must be present to do business.
- shareholder: means a record shareholder, a beneficial shareholder, and a voting trust beneficial owner whose entitlement to bring the proceeding under this article is not inconsistent with the voting trust agreement. See Virginia Code 13.1-672.7
1. Conducted a review and evaluation, adequately informed in the circumstances, of the allegations made in the demand or complaint;
2. Determined in good faith on the basis of that review and evaluation that the maintenance of the derivative proceeding is not in the best interests of the corporation; and
3. Submitted in support of the motion a short and concise statement of the reasons for its determination.
B. Unless a panel is appointed pursuant to subsection E, the determination in subsection A shall be made by:
1. A majority vote of disinterested directors present at a meeting of the board of directors if the disinterested directors constitute a quorum; or
2. A majority vote of a committee consisting of two or more disinterested directors appointed by a majority vote of disinterested directors present at a meeting of the board of directors, regardless of whether such disinterested directors constituted a quorum.
C. If a derivative proceeding is commenced after a determination has been made rejecting a demand by a shareholder, the complaint shall allege with particularity facts establishing that the requirements of subsection A or B have not been met. With respect to any allegation that the requirements of subsection A or B have not been met, the plaintiff shall be entitled to discovery if, and only with respect to, facts that are alleged in the complaint with particularity.
D. The plaintiff shall have the burden of proving that the requirements of subsection A or B have not been met, except that the corporation shall have the burden with respect to the issue of disinterestedness under subsection B if the complaint alleges with particularity facts raising a substantial question as to such disinterestedness.
E. Upon motion by the corporation, the court may appoint a panel of disinterested persons to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation.