A derivative claim belongs to the company, so the board ordinarily decides whether to bring it. A shareholder must first demand that the board sue, or plead with particularity why demand would be futile.

Making demand is generally treated as conceding the board’s independence for purposes of that claim. If the board refuses, review is deferential and the shareholder must plead that refusal was wrongful. That is a hard road, which is why most plaintiffs plead futility instead.

Futility is assessed director by director: whether the director received a material personal benefit from the challenged conduct, faces a substantial likelihood of liability, or lacks independence from someone who does. If half or more of the board is compromised, demand is excused.

Particularity is a real pleading burden. Conclusory allegations that directors are friendly, or that they approved the transaction, do not suffice. Books and records inspection before filing is the standard way to obtain the facts, and courts have repeatedly said so.

Special litigation committees. A board may appoint independent members to investigate and seek dismissal. Courts examine the committee’s independence, good faith and the reasonableness of its investigation, and in some jurisdictions apply their own business judgment on top.

Continuous ownership is generally required throughout the litigation, which a merger can destroy.