Four Criteria You Must Meet to Be a Plaintiff in a Shareholder Derivative Lawsuit in Florida

Mar 3, 2018

Welcome to Baytowne Reporting's guide to becoming a plaintiff in a shareholder derivative lawsuit in Florida. In this comprehensive article, we will walk you through the four essential criteria that you must meet to pursue a shareholder derivative lawsuit. By understanding these criteria, you can determine whether you have a valid claim and take the necessary steps with confidence.

Understanding Shareholder Derivative Lawsuits

A shareholder derivative lawsuit allows shareholders to file a lawsuit on behalf of a company against a third party, typically an officer, director, or other insiders. These lawsuits aim to hold responsible parties accountable for actions that have harmed the company and its shareholders. To become a plaintiff in such a lawsuit, you must meet specific criteria to ensure the validity of your claim.

Criteria #1: Being a Company Shareholder

The first criterion is to be a shareholder of the company you are filing a lawsuit against. Without being a shareholder, you lack the legal standing to initiate a shareholder derivative lawsuit. Your ownership interest in the company must be established through the ownership of shares, which can be common or preferred stock. It is important to have proof of your share ownership during the litigation process.

Criteria #2: Demonstrating Adequate Ownership

In Florida, to become a plaintiff in a shareholder derivative lawsuit, you must also demonstrate adequate ownership. The law requires you to hold shares at the time the alleged misconduct occurred or received them through an assignment. Adequate ownership typically involves owning a certain number or percentage of shares in relation to the overall outstanding shares of the company. This criterion ensures that an individual with a minimal interest in the company does not abuse the process.

Criteria #3: Making a Demand or Showing Demand Futility

Prior to filing a shareholder derivative lawsuit, you must make a demand to the board of directors, requesting them to take appropriate action to address the alleged misconduct. If the board refuses or fails to take action, you can proceed with legal action. However, if you can show that making a demand would be futile due to conflicts of interest or other reasons, you may bypass this requirement. Demonstrating demand futility strengthens your case and indicates that the board is unlikely to pursue the company's best interests.

Criteria #4: Fair and Adequate Representation

The final criterion for becoming a plaintiff in a shareholder derivative lawsuit is to ensure that you have fair and adequate representation. Engaging a skilled attorney experienced in shareholder derivative litigation is crucial to navigate the complexities of the legal process. Your attorney will guide you through the procedural steps, gather evidence, and advocate for your interests, helping you build a strong case and increase your chances of success.

Contact Baytowne Reporting for Comprehensive Legal Reporting Services

As a leading provider of legal reporting services in Florida, Baytowne Reporting is dedicated to supporting law firms and legal professionals with accurate, timely, and comprehensive reporting. Our team of experienced court reporters understands the intricate details of legal proceedings, ensuring all critical information is captured and documented precisely.

If you require assistance with your shareholder derivative lawsuit or any other legal reporting needs in Florida, contact Baytowne Reporting today. We are committed to delivering exceptional services that meet the highest standards of professionalism and reliability.


Becoming a plaintiff in a shareholder derivative lawsuit in Florida requires meeting specific criteria, including being a company shareholder, demonstrating adequate ownership, making a demand or showing demand futility, and ensuring fair and adequate representation. By understanding these criteria and seeking the assistance of seasoned legal professionals like Baytowne Reporting, you can navigate the process effectively and protect your rights as a shareholder.

Skyler Stites
Thank you for providing this useful guide on the criteria for becoming a plaintiff in a shareholder derivative lawsuit in Florida. It's important for potential plaintiffs to understand these essential criteria in order to determine the validity of their claims and proceed with confidence. The article offers clear and concise information, making it a valuable resource for those seeking to take legal action. It's always beneficial to have access to such informative content that helps individuals navigate the legal landscape.
Nov 12, 2023