A derivative claim for harm befalling a corporation belongs to the corporation itself. Under the state’s board-centric model of corporate governance, Delaware law empowers the board of directors to control such claims, provided the directors are sufficiently impartial on the subject. A shareholder plaintiff therefore must either make a pre-suit demand on the board to take action concerning the prospective derivative claim or plead with particularity that a pre-suit demand would be futile, i.e., a majority of the board is interested or lacks independence on the claim’s subject.

Delaware law has long recognized that significant personal or professional ties to a party who would be a defendant in the prospective derivative claim, like a conflicted controlling stockholder, is grounds for finding a director lacks independence. Recent decisions from the Delaware Supreme Court provide a useful road map for this area of the law, as recognized in one of the latest Delaware Court of Chancery decisions addressing the issue: In re BGC Partners Derivative Litigation, Consol. C.A. No. 2018-0722-AGB (Del. Ch. Sept. 30, 2019).

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