Stockholders' derivative action

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Business Law Power Point Presentation about ultra vires and derivative action. Daggett Industries wanted to go into a new line of business but would some of the stockholders object?

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Stockholders' derivative action

  1. 1. Cosmetic Skin Care Industry 2011 = $100,000,000,000 in profits 1% = $1,000,000,000 of profits
  2. 2. Objection by some shareholdersDerivative action Ultra Vires
  3. 3. Ultra vires is Latin for “beyond the powers of.”
  4. 4. Derivative action Ultra Vires NCGS § 55-2-02(b)(2)(2001)
  5. 5. Deviation: a change from a customary or agreed upon course of action.
  6. 6. NOMINAL“In name only.”
  7. 7. …unless where a stockholder alleges demand upon and refusal by thecorporation to institute the action to redress the wrong. Baker v. Data Dynamics Inc., 561 F. Supp. 1161 (1983)
  8. 8. Norman v. Nash Johnson and Sons’ Farms, Inc., 537 S.E. 248, (2000)
  9. 9. WHO SUFFERED THE ALLEGED HARM? The corporation The stockholderCabaniss v. Deutsche Bank Securities,611 S.E. 2d 878 (2005)
  10. 10. Aubin v. Susi, 560 S.E. 2d 875 (2002);Outen v. Mical, 454 S.E. 2d 883 (1995)
  11. 11. …discontinuance, compromise, or settlement of action.Alford v. Shaw, 358 S.E. 2d 323 (1987)
  12. 12. Brinson v. Mills Supply Co., 14 S.E. 2d 505 (1941)
  13. 13. Lee v. Wake County, 598 S.E. 2d 427 (2004)Victor v. Chadwick Mfg. Co., 61 S.E. 653 (1908)
  14. 14. Snow Hill Banking & Trust Co. v. D.J. Odom Drug Co.,125 S.E. 394 (1924) Kerr v. Hicks, 70 S.E. 486 (1911)
  15. 15. NO!
  16. 16. North Carolina Attorney General Roy A. Cooper NCGS § 55-14-30
  17. 17. In conclusion…Inform the stockholder to get the majority toamend the articles of incorporation to broadenDaggett Industries’ purpose. NCGS 55-10-03

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