A derivative action asserts the company’s claim, and the procedure reflects that the plaintiff is a representative rather than the owner of the claim.
Verification. The complaint is verified in most systems.
Standing. Ownership at the time of the transaction complained of, and continuous ownership through the litigation. A merger extinguishing the plaintiff’s shares generally ends standing, subject to narrow exceptions.
Demand or futility pleaded with particularity.
The company as nominal defendant, with its own counsel, and frequently a position that differs from that of the individual defendants — a structure that requires separate representation.
Special litigation committee. The board may appoint independent directors to investigate and to move to dismiss. Review examines independence, good faith and the reasonableness of the investigation, and in some jurisdictions applies the court’s own business judgment as a second step.
Discovery is frequently stayed pending a motion to dismiss.
Settlement and dismissal require court approval after notice to shareholders, because the claim belongs to the company and other shareholders are affected.
Fees. A successful plaintiff’s counsel is compensated from the recovery or, where the benefit is non-monetary, on a substantial benefit theory.