Review Granted: Standing to Bring Shareholder Derivative Action
The California Supreme Court has agreed to review a case on whether shareholder standing to bring a derivative action is governed by the corporate internal affairs doctrine. Here is the issue, as framed by the court's "weekly summary."
(1) Does the question of standing to bring a shareholder’s derivative action based on share ownership involve the “internal affairs” of a corporation and thus invoke the internal affairs doctrine, under which matters regulating the internal affairs of a corporation are governed by the law of the state of incorporation (here Delaware)? (2) If not, did plaintiff retain standing under California law to prosecute a shareholder’s derivative action even though he lost his shares in the corporation while the action was pending, or does California, like Delaware, require stock ownership throughout the litigation?
Grosset v. Wenaas, S139285, formerly at 133 Cal.App.4th 710, review granted 1/4/06.
(1) Does the question of standing to bring a shareholder’s derivative action based on share ownership involve the “internal affairs” of a corporation and thus invoke the internal affairs doctrine, under which matters regulating the internal affairs of a corporation are governed by the law of the state of incorporation (here Delaware)? (2) If not, did plaintiff retain standing under California law to prosecute a shareholder’s derivative action even though he lost his shares in the corporation while the action was pending, or does California, like Delaware, require stock ownership throughout the litigation?
Grosset v. Wenaas, S139285, formerly at 133 Cal.App.4th 710, review granted 1/4/06.
