A. A shareholder shall not commence or maintain a derivative proceeding unless the shareholder:
1. Was a shareholder of the corporation at the time of the act or omission complained of, became a shareholder through transfer by operation of law from one who was a shareholder at that time, or became a shareholder before public disclosure and without knowledge of the act or omission complained of;
2. Was a shareholder at the time the shareholder made the written demand required by subdivision B 1; and
3. Fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
B. No shareholder may commence a derivative proceeding until:
1. A written demand has been delivered to the corporation to take suitable action; and
2. Ninety days have expired from the date delivery of the written demand was made on the corporation unless (i) the shareholder has earlier been notified that the demand has been rejected by the corporation or (ii) irreparable injury to the corporation would result by waiting for the expiration of the 90-day period.
C. The written demand required by subdivision B 1 shall describe in reasonable detail the reasons for the demand and the action being requested and shall state that the shareholder may commence a derivative proceeding if the action is not taken. If the shareholder is a beneficial shareholder or an unrestricted voting trust beneficial owner, the written demand shall be accompanied by evidence of such beneficial ownership.
D. If the corporation commences an inquiry into the allegations made in the demand or complaint, the court may stay any derivative proceeding for such period as the court deems appropriate.
1992, c. 802; 2007, c. 165; 2010, c. 782; 2019, c. 734; 2026, cc. 383, 892.
Notes of Decisions
Cited in
24
cases (
5 in the last 5 years), 1997–2024 · leading case:
Cattano v. Bragg, 727 S.E.2d 625 (Va. 2012).
Cattano v. Bragg, 727 S.E.2d 625 (Va. 2012).
· cites it 18× “In this appeal, we address the standing of a dissenting minority shareholder bringing a derivative suit under Code § 13.1-672.1 against the majority shareholder of a two-shareholder corporation while simultaneously seeking the judicial dissolution of the corporation.”
DCG & T ex rel. Battaglia/Ira v. Knight, 68 F. Supp. 3d 579 (E.D. Va. 2014).
· cites it 9× “Va.Code § 13.1-672.1(A). Second, a plaintiff must make a written demand on the corporation “to take suitable action” and allow 90 days for the corporation to respond.”
Willliams v. Stevens, 86 Va. Cir. 385 (Norfolk Cir. Ct. 2013).
· cites it 22× “) Defendants correctly state that the written demand requirement embodied in Va. Code § 13.1-672.1(B) (1) is mandatory.”
Owens v. Owens, 589 S.E.2d 488 (Va. Ct. App. 2003).
· cites it 2× “1-747(A)(l)(b) & (d), authorizes derivative suits in equity where appropriate, Code §§ 13.1-672.1 to 13.1-672.5, 2 and provides a mechanism to *856 dissolve a corporation and to distribute its assets in the face of an intractable director deadlock, Code §§ 13.”
Willard v. Moneta Bldg. Supply, Inc., 515 S.E.2d 277 (Va. 1999).
· cites it 4× “" On April 23, 1997, Willard, on behalf of Moneta and all its stockholders, filed this shareholders' derivative suit pursuant to Code §§ 13.1-672.1 et seq., naming Moneta, A.”
Werbowsky v. Collomb, 766 A.2d 123 (Md. 2001).
“§ 16 -10a-740(3); Va.Code § 13.1-672.1(B); Wis.Stat.Ann. § 180.”
Willard v. Moneta Bldg. Supply, Inc., 551 S.E.2d 596 (Va. 2001).
· cites it 2× “Facts and Proceedings Below Willard previously filed a derivative action pursuant to Code § 13.1-672.1 on behalf of Moneta and all its stockholders against Moneta, A.”
Jennings v. Kay Jennings Fam. Ltd., 659 S.E.2d 283 (Va. 2008).
· cites it 2× “We have not previously addressed the factors a court should consider when determining whether the plaintiff "fairly and adequately" represents the limited partners and partnership in a derivative action, nor have we construed a similar standing requirement for shareholder…”
Schrager v. Isquith, 69 Va. Cir. 31 (Richmond County Cir. Ct. 2005).
· cites it 6× “See Va. Code § 13.1-672.1. Here, Plaintiff, Schrager, one of two members of the co-plaintiff limited liability company and the company itself are Plaintiffs asserting the derivative claims of common law and civil conspiracy, breach of fiduciary duties, breach of contract,…”
Byelick v. Vivadelli, 79 F. Supp. 2d 610 (E.D. Va. 1999).
· cites it 2× “8 Although a shareholder challenging an action of the directors of a publicly held corporation is typically required to sue in a derivative capacity, see, for example, Va.Code Ann. § 13.1-672.1, closely-held corporations raise a different set of concerns.”
Richelieu v. Kirby, 48 Va. Cir. 260 (Fairfax Cir. Ct. 1999).
· cites it 3× “1 of the Virginia Code — Derivative Proceedings for Stock Corporations — contains no language granting a right to bring a derivative action but instead places specific limitations on tire right to do so. Similarly, there is no express grant of the right to bring a derivative…”
Maurer v. Slickedit, Inc., 2005 NCBC 1 (N.C. Bus. Ct. 2005).
“1999); see also Va. Code Ann. § 13.1-672.1 (B) (2004). {29} In this matter, plaintiff has not complied with the demand requirements set forth above with respect to any derivative claims.”
— Va. Code Ann. § 13.1-672.1(2) — 1 case
— Va. Code Ann. § 13.1-672.1(A) — 2 cases
DCG & T ex rel. Battaglia/Ira v. Knight, 68 F. Supp. 3d 579 (E.D. Va. 2014).
“Va.Code § 13.1-672.1(A). Second, a plaintiff must make a written demand on the corporation “to take suitable action” and allow 90 days for the corporation to respond.”
Cattano v. Bragg, 727 S.E.2d 625 (Va. 2012).
“In this appeal, we address the standing of a dissenting minority shareholder bringing a derivative suit under Code § 13.1-672.1 against the majority shareholder of a two-shareholder corporation while simultaneously seeking the judicial dissolution of the corporation.”
— Va. Code Ann. § 13.1-672.1(A)(3) — 1 case
— Va. Code Ann. § 13.1-672.1(A)(4) — 1 case
Cattano v. Bragg, 727 S.E.2d 625 (Va. 2012).
“In this appeal, we address the standing of a dissenting minority shareholder bringing a derivative suit under Code § 13.1-672.1 against the majority shareholder of a two-shareholder corporation while simultaneously seeking the judicial dissolution of the corporation.”
— Va. Code Ann. § 13.1-672.1(B) — 5 cases
Werbowsky v. Collomb, 766 A.2d 123 (Md. 2001).
“§ 16 -10a-740(3); Va.Code § 13.1-672.1(B); Wis.Stat.Ann. § 180.”
Willliams v. Stevens, 86 Va. Cir. 385 (Norfolk Cir. Ct. 2013).
“) Defendants correctly state that the written demand requirement embodied in Va. Code § 13.1-672.1(B) (1) is mandatory.”
— Va. Code Ann. § 13.1-672.1(B)(1) — 2 cases
Willliams v. Stevens, 86 Va. Cir. 385 (Norfolk Cir. Ct. 2013).
“) Defendants correctly state that the written demand requirement embodied in Va. Code § 13.1-672.1(B) (1) is mandatory.”
— Va. Code Ann. § 13.1-672.1(B)(2) — 1 case
DCG & T ex rel. Battaglia/Ira v. Knight, 68 F. Supp. 3d 579 (E.D. Va. 2014).
“Va.Code § 13.1-672.1(A). Second, a plaintiff must make a written demand on the corporation “to take suitable action” and allow 90 days for the corporation to respond.”
— Va. Code Ann. § 13.1-672.1(B)(l) — 1 case
Willliams v. Stevens, 86 Va. Cir. 385 (Norfolk Cir. Ct. 2013).
“) Defendants correctly state that the written demand requirement embodied in Va. Code § 13.1-672.1(B) (1) is mandatory.”
— Va. Code Ann. § 13.1-672.1(BX1) — 1 case
Willliams v. Stevens, 86 Va. Cir. 385 (Norfolk Cir. Ct. 2013).
“) Defendants correctly state that the written demand requirement embodied in Va. Code § 13.1-672.1(B) (1) is mandatory.”
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