Question

Marge is a shareholder of Evergreen Terrace Inc. She believes that Bart has been stealing money from the corporation for years. She demands that the Board of Directors take legal action against Bart for harming the corporation. However, the Board decides that it would be too embarrassing if people knew someone was stealing money from them, so they decline to file a lawsuit.

                Marge is frustrated by this and doesn’t want to just give up. Is there anything she can try to do? What would be the likely result?

Answer 1

As the Board of Directors has decided not to file the lawsuit against Bart, It does not end there.

The Shareholder has certain rights to exercise. The shareholders holding the prescribed quantity of holdings or in conjunction with the other shareholders, who in total hold the prescribed holding or voting power in the company shall have the right to move against the decision of the board.

The application can be made to the Tribunal having jurisdiction which in turn forwards the issue to the sessions court or the special court.

If the tribunal after receiving the apllication along with fees, if satisfied shall admit the grievance and order for investigation(if necessary).

The outcome of the investigation shall be as per the evidences collected and for the party at whom the issue is directed shall be given the right of being heard.

Before the final order (if necessary) a Show cause notice might also be served for the party at default.

The decision of the tribunal/court's shall be binding and is enforceable under law.

Conclusion:

Thus following the above procedure Marge can proceed against the decision of the Board of directors declining to file the lawsuit, either by herself or with the consent of other shareholders in writing make an appeal to the tribunal filing the application along with the fees(as prescribed).

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