New York Consolidated Laws

N.Y. Business Corporation Law § 626 (2026)

Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor

✓ current as of May 2026

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§ 626. Shareholders' derivative action brought in the right of the
         corporation to procure a judgment in its favor.
  (a) An action may be brought in the right of a domestic or foreign
corporation to procure a judgment in its favor, by a holder of shares or
of voting trust certificates of the corporation or of a beneficial
interest in such shares or certificates.
  (b) In any such action, it shall be made to appear that the plaintiff
is such a holder at the time of bringing the action and that he was such
a holder at the time of the transaction of which he complains, or that
his shares or his interest therein devolved upon him by operation of
law.
  (c) In any such action, the complaint shall set forth with
particularity the efforts of the plaintiff to secure the initiation of
such action by the board or the reasons for not making such effort.
  (d) Such action shall not be discontinued, compromised or settled,
without the approval of the court having jurisdiction of the action.  If
the court shall determine that the interests of the shareholders or any
class or classes thereof will be substantially affected by such
discontinuance, compromise, or settlement, the court, in its discretion,
may direct that notice, by publication or otherwise, shall be given to
the shareholders or class or classes thereof whose interests it
determines will be so affected; if notice is so directed to be given,
the court may determine which one or more of the parties to the action
shall bear the expense of giving the same, in such amount as the court
shall determine and find to be reasonable in the circumstances, and the
amount of such expense shall be awarded as special costs of the action
and recoverable in the same manner as statutory taxable costs.
  (e) If the action on behalf of the corporation was successful, in
whole or in part, or if anything was received by the plaintiff or
plaintiffs or a claimant or claimants as the result of a judgment,
compromise or settlement of an action or claim, the court may award the
plaintiff or plaintiffs, claimant or claimants, reasonable expenses,
including reasonable attorney's fees, and shall direct him or them to
account to the corporation for the remainder of the proceeds so received
by him or them. This paragraph shall not apply to any judgment rendered
for the benefit of injured shareholders only and limited to a recovery
of the loss or damage sustained by them.

Notes of Decisions

Cited in 188 cases (32 in the last 5 years), 1966–2026 · leading case: Tzolis v. Wolff, 884 N.E.2d 1005 (NY 2008).

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Tzolis v. Wolff, 884 N.E.2d 1005 (NY 2008). · cites it 8× “) Eventually, the rule that derivative suits could be brought on behalf of ordinary business corporations was codified by statute ( see Business Corporation Law § 626 [a]). But until relatively recently, no similar statutory provision was made for another kind of entity, the…”

Marx v. Akers, 666 N.E.2d 1034 (NY 1996). · cites it 6× “Supreme Court concluded that excusing a demand here would render Business Corporation Law § 626 (c) "virtually meaningless in any shareholders’ derivative action in which all members of a corporate board are named as defendants.”

Levandusky v. One Fifth Avenue Apt. Corp., 553 N.E.2d 1317 (NY 1990). · cites it 4× “Petitioner was not making a claim of waste or self-dealing by corporate management of the type that would ordinarily be cognizable in a derivative action brought pursuant to Business Corporation Law § 626.”

Goldstein v. Bass, 138 A.D.3d 556 (N.Y. App. Div. 2016). · cites it 8× “The motion court granted defendants' motions to dismiss the complaint upon a finding that plaintiff failed to plead demand futility ( see Business Corporation Law § 626[c]). The court did not reach the additional grounds raised by defendants that the claims failed to state a…”

Cent. Laborers' Pension Fund v. Blankfein, 111 A.D.3d 40 (N.Y. App. Div. 2013). · cites it 8× “Exactly six weeks later, on January 25, 2010, plaintiffs declared that, with GSG’s January 21 announcement that 2009 compensation would be at a lesser level than plaintiffs had forecast, the action had attained its objective, and stated their intention to move for a voluntary…”

Caprer v. Nussbaum, 36 A.D.3d 176 (N.Y. App. Div. 2006). “Statutory authority to bring a derivative action is found in Business Corporation Law § 626, the Not-For-Profit Corpora *187 tion Law (see N-PCL 623) and the Partnership Law (see Partnership Law § 115).”

Pessin v. Chris-Craft Indus., Inc., 181 A.D.2d 66 (N.Y. App. Div. 1992). · cites it 6× “In granting the motion to dismiss, the Supreme Court concluded that while plaintiffs were shareholders at the time that they commenced this action, thus satisfying the first requirement of Business Corporation Law § 626 (b), they did not meet the second condition that they be…”

Bansbach v. Zinn, 801 N.E.2d 395 (NY 2003). “A balance of these considerations is maintained by the requirement that a plaintiff shareholder set forth in the complaint—with particularity—an attempt to “secure the initiation of such action by the board or the reasons for not making such effort” (Business Corporation Law §…”

Cent. Laborers' Pension Fund v. Blankfein, 34 Misc. 3d 456 (N.Y. Sup. Ct. 2011). · cites it 8× “002, plaintiffs seek an order dismissing this consolidated action as moot, and an award of attorneys’ fees and expenses, pursuant to Business Corporation Law § 626 (e). By motion sequence No.”

Ctr. v. Hampton Affiliates, Inc., 488 N.E.2d 828 (NY 1985). “Although the minutes of the December 8th board of directors meeting and testimony contained in a pretrial deposition indicate that Gross informed the other two directors of plaintiffs claim to stock of Sales, the corporate minutes make it clear that this disclosure came only…”

Gunzburg v. Gunzburg, 152 A.D.2d 537 (N.Y. App. Div. 1989). · cites it 2× “The minority shareholders moved for partial summary judgment on the reimbursement cause of action, and the majority shareholders Arthur Gunzburg, Mildred Savitt and Bernard Gunzburg cross-moved for an order dismissing the complaint on the grounds that it failed to comply with…”

Katz v. Beil, 142 A.D.3d 957 (N.Y. App. Div. 2016). “Contrary to the Supreme Court’s conclusion, the remaining proposed derivative causes of action, which were directed against the individual defendants, were not palpably insufficient nor patently devoid of merit (see Business Corporation Law § 626 [a]; Partnership Law § 115; see…”

Show all 188 citing cases →

— N.Y. Business Corporation Law § 626(a) — 1 case

Stephenson v. Landegger, 337 F. Supp. 591 (S.D.N.Y. 1971).

— N.Y. Business Corporation Law § 626(b) — 4 cases

Werfel v. Kramarsky, 61 F.R.D. 674 (N.D.N.Y. 1974).

Stephenson v. Landegger, 337 F. Supp. 591 (S.D.N.Y. 1971).

Goldman v. Nerds Broadway Ltd. Liab. Co., 2022 NY Slip Op 00721 (N.Y. App. Div. 2022).

— N.Y. Business Corporation Law § 626(c) — 6 cases

Goldstein v. Bass, 138 A.D.3d 556 (N.Y. App. Div. 2016). “The motion court granted defendants' motions to dismiss the complaint upon a finding that plaintiff failed to plead demand futility ( see Business Corporation Law § 626[c]). The court did not reach the additional grounds raised by defendants that the claims failed to state a…”

Anderson v. Artimus Constr., Inc., 2026 NY Slip Op 02721 (N.Y. App. Div. 2026).

Guzman v. Kordonsky, 2019 NY Slip Op 8176 (N.Y. App. Div. 2019).

St. Clair-Hibbard v. Am. Fin. Trust, Inc. (S.D.N.Y. 2019).

Ret. Plan for Gen. Empls. of the City of N. Miami Beach v. McGraw, 2018 NY Slip Op 1027 (N.Y. App. Div. 2018).

— N.Y. Business Corporation Law § 626(e) — 3 cases

O'Mahony v. Whiston, 2024 NY Slip Op 00980 (N.Y. App. Div. 2024).

Gam v. Dvir, 2024 NY Slip Op 00181 (N.Y. App. Div. 2024).

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