A New York court found that a shareholder could bring a direct suit and not just a derivative suit to address a complaint that a shareholder agreement was violated.
The case: A shareholder brought suit against a company in New York District Court contending the company had engaged in conflicted transactions that rendered his options rights worthless, which, he alleged, “breached both the express terms of the contract and the implied covenant of good faith and fair dealing.”
The District Court judge dismissed the complaint, ruling that the shareholder’s claims could only be brought in a derivative suit. On appeal, however, a Second Circuit judge held in August 2022 that while the complaint regarding the breach of the conflicted-transactions provision of the agreement could only be brought as a derivative suit, the shareholder could bring a direct suit for breach of the covenant of good faith and fair dealing because that covenant is based on his individual options rights.
The full text of this case is included in the Fall 2022 “New York Laws Governing Business Entities Annotated,” along with the full text of three other cases covering recent legal developments regarding shareholder standing, limited liability company (LLC) membership interests, and not-for-profit corporations. More than 40 new case notes from New York state and federal courts interpreting the law have also been added since the Spring edition to ensure that legal and business professionals have access to the case decisions that could impact transaction work and entity management.
Published by CSC in cooperation with legal publisher LexisNexis®, this two-volume resource contains up-to-date New York business entity legislation as well as other valuable features that make legal research faster and more efficient.
The Fall edition contains the latest legislative changes through Chapter 553 of the 2022 Session. The Table of Sections Affected provides an overview of legislative changes, and Blackline Amendment notes indicate exactly how the law has changed.
More than 100 New York forms for incorporation and formation, qualification, merger, dissolution, and name reservation for all entity types are available on the LexisNexis Store online download center. A list of forms is included in the book’s appendix. Up-to-date Publication and Fee Tables list filing fees and publication requirements for New York entities.
The Fall 2022 “New York Laws Governing Business Entities Annotated” is available as a two-volume softbound book or as an eBook compatible with dedicated eReader devices, computers, tablets, and smartphones that use eReader software or applications. It is also available on the LexisNexis Digital Library.
To learn more about the Fall 2022 Edition of “New York Laws Governing Business Entities Annotated,” call 1-800-533-1637 or visit us online at lexisnexis.com/csc.
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