13.1-672.4 - Dismissal. - Virginia Statutes

§ 13.1-672.4. Dismissal.

A. A derivative proceeding shall be dismissed by the court on motion by thecorporation if one of the groups specified in subsection B or E has:

1. Conducted a review and evaluation, adequately informed in thecircumstances, of the allegations made in the demand or complaint;

2. Determined in good faith on the basis of that review and evaluation thatthe maintenance of the derivative proceeding is not in the best interests ofthe corporation; and

3. Submitted in support of the motion a short and concise statement of thereasons for its determination.

B. Unless a panel is appointed pursuant to subsection E, the determination insubsection A shall be made by:

1. A majority vote of disinterested directors present at a meeting of theboard of directors if the disinterested directors constitute a quorum; or

2. A majority vote of a committee consisting of two or more disinteresteddirectors appointed by a majority vote of disinterested directors present ata meeting of the board of directors, whether or not such disinteresteddirectors constituted a quorum.

C. If a derivative proceeding has been commenced after a determination hasbeen made rejecting a demand by a shareholder, the complaint shall allegewith particularity facts establishing that the requirements of subsection Ahave not been met. The plaintiff shall be entitled to discovery with respectto the issues presented by the motion only if and to the extent that thecomplaint alleges such facts with particularity.

D. The plaintiff shall have the burden of proving that the requirements ofsubsection A have not been met, except that the corporation shall have theburden with respect to the issue of independence under subsection B if thecomplaint alleges with particularity facts raising a substantial question asto such independence.

E. The court may appoint a panel of independent persons upon motion by thecorporation to make a determination whether the maintenance of the derivativeproceeding is in the best interests of the corporation.

(1992, c. 802; 1993, c. 233; 2005, c. 765.)