Derivative actions: Authority of beneficial owner to bring action; qualifications of plaintiff; pleading; expenses.
1. A beneficial owner may maintain an action in the right of a business trust to recover a judgment in its favor if trustees having authority to do so have refused to bring the action or if an effort to cause those trustees to bring the action is unlikely to succeed.
2. In a derivative action, the plaintiff must be a beneficial owner at the time of bringing the action and:
(a) He must have been a beneficial owner at the time of the transaction of which he complains; or
(b) His status as a beneficial owner must have devolved upon him by operation of law or pursuant to a provision of the certificate of trust or the governing instrument from a person who was a beneficial owner at the time of the transaction.
3. In a derivative action, the complaint must state with particularity the effort, if any, of the plaintiff to cause the trustees to bring the act, or the reasons for not making the effort.
4. If a derivative action is successful, in whole or in part, or if anything is received by the business trust through judgment or settlement of the action, the court may award the plaintiff reasonable expenses, including attorney’s fees. If the plaintiff receives any proceeds of judgment or settlement, the court shall make the award of his expenses payable from those proceeds and remit the remainder to the business trust. If the proceeds received by the plaintiff are less than the expenses awarded, the court may direct all or part of the remainder of the award to be paid by the business trust.
5. A beneficial owner’s right to bring a derivative action may be subject to additional standards and restrictions set forth in the governing instrument, including, without limitation, a requirement that beneficial owners of a specified beneficial interest join in the action.
Last modified: February 26, 2006