Arthur is a shareholder of Sigma Corp.He has evidence to suggest that its president/CEO has allowed the corporation to engage in acts that are ultra vires.Based upon this evidence, Arthur contacts an attorney and sues the corporation on behalf of the corporation.The lawsuit Arthur has filed is known as a(n):
A)direct suit.
B)derivative suit.
C)class action suit.
D)unauthorized suit.

Question

Quizplus · Accepted Answer

A derivative suit is a lawsuit filed by a shareholder on behalf of the corporation against a third party, often an insider of the corporation, such as an executive or director, for acts that harm the corporation.

Arthur Is a Shareholder of Sigma Corp