Rutgers Law

New Jersey Statutes, Title: 14A, CORPORATIONS, GENERAL

    Chapter 3: General powers.

      Section: 14A:3-6: Provisions relating to actions by shareholders

           (1) No action shall be brought in this State by a shareholder in the right of a domestic or foreign corporation unless the plaintiff was a holder of shares or of voting trust certificates therefor at the time of the transaction of which he complains, or his shares or voting trust certificates thereafter devolved upon him by operation of law from a person who was a holder at such time.

(2) In any action hereafter instituted in the right of any such corporation by the holder or holders of shares of such corporation or of voting trust certificates therefor, the court having jurisdiction, upon final judgment and a finding that the action was brought without reasonable cause, may require the plaintiff or plaintiffs to pay to the parties named as defendant the reasonable expenses, including fees of attorneys, incurred by them in the defense of such action.

(3) In any action now pending or hereafter instituted or maintained in the right of any such corporation by the holder or holders of less than 5\% of the outstanding shares of any class or series of such corporation or of voting trust certificates therefor, unless the shares or voting trust certificates so held have a market value in excess of $25,000.00, the corporation in whose right such action is brought shall be entitled at any time before final judgment to require the plaintiff or plaintiffs to give security for the reasonable expenses, including fees of attorneys, that may be incurred by it in connection with such action or may be incurred by other parties named as defendant for which it may become legally liable. Market value shall be determined as of the date that the plaintiff institutes the action or, in the case of an intervener, as of the date that he becomes a party to the action. The amount of such security may from time to time be increased or decreased, in the discretion of the court, upon showing that the security provided has or may become inadequate or excessive. The corporation shall have recourse to such security in such amount as the court having jurisdiction shall determine upon the termination of such action.

L.1968, c.350; amended by L.1973, c. 366, s. 9, eff. May 1, 1974.



This section added to the Rutgers Database: 2013-06-10 16:36:30.

Older versions of 14a:3-6 (if available):

Court decisions that cite this statute: CLICK HERE.