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Demand Futility

Demand Futility

Definition

Legal principle that excuses a plaintiff in a shareholder-derivative suit from the general requirement that, before bringing the suit, the shareholder must demand that the corporation's board of directors cause the corporation to bring the suit itself. Demand may be futile if the directors are unable to fairly consider the shareholder's demand, including if a majority of the directors are interested in the transaction at issue in the action.

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