Court Opinions

State Laws

US Code

US Constitution

Actions by shareholders or members to enforce a secondary right - 15 Pa. Cons. Stat. § 523

Legal Research Home > Pennsylvania Statutes

     § 523.  Actions by shareholders or members to enforce a
                secondary right.
        (a)  General rule.--In any action brought to enforce a
     secondary right on the part of one or more shareholders or
     members against any officer or director or former officer or
     director of a banking institution or a savings association,
     because the corporation refuses to enforce rights which may
     properly be asserted by it, the plaintiff or plaintiffs must
     aver and it must be made to appear that the plaintiff or each
     plaintiff was a shareholder or was a member of the corporation
     at the time of the transaction of which he complains or that his
     stock or membership devolved upon him by operation of law from a
     person who was a shareholder or member at that time.
        (b)  Security for costs.--In any such action instituted or
     maintained by a holder or holders of less than 5% of the
     outstanding shares of any class of the corporation or voting
     trust certificates therefor, or by a member or members of a
     corporation organized without capital stock which has
     outstanding contracts or accounts with its members if the value
     of the contracts or accounts held or owned by the member or
     members instituting or maintaining the suit is less than 5% of
     the value of all the contracts or accounts outstanding, the
     corporation in whose right the action is brought shall be
     entitled, at any stage of the proceedings, to require the
     plaintiff or plaintiffs to give security for the reasonable
     expenses, including attorneys' fees, which may be incurred by it
     in connection therewith and for which it may become liable
     pursuant to section 522 (relating to indemnification of
     authorized representatives) (but only insofar as relates to
     mandatory indemnification in actions by or in the right of the
     corporation) to which security the corporation shall have
     recourse in such amount as the court having jurisdiction shall
     determine upon the termination of the action. The amount of the
     security may, from time to time, be increased or decreased in
     the discretion of the court having jurisdiction of the action
     upon showing that the security provided has or may become
     inadequate or excessive.
        (c)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Director."  Includes any individual performing the function
     of director, regardless of title.
        "Member."  Includes depositors in a mutual banking
     institution.
     (Dec. 19, 1990, P.L.834, No.198, eff. imd.)

        1990 Amendment.  Act 198 amended subsec. (a).

Last modified: November 27, 2007