You represent a corporation when one member of the four-person board of directors comes to you with a new lawsuit filed against all four directors by a minority shareholder, alleging breach of fiduciary duty, fraud, and/or another business tort. The board asks you to put together a plan for handling the derivative action and to outline strategies available to the board. Where do you start? What are your options?
This article examines the options available to a board when confronted with derivative actions, the duties and responsibilities of the board in responding to such actions, and how to determine a proper course of action.