Shareholders planning to file a derivative suit on behalf of a corporation in Texas had better be sure their presuit demand letter meets the requirements the state Supreme Court set out in a May 22 opinion.
In a case of first impression, the Supreme Court rejected a two-sentence demand letter that a Texas corporation’s board of directors received three days before a shareholder filed a derivative suit to halt a pending merger. The 8-0 decision in In Re: Harold R. Schmitz, et al. spells out that a demand letter must name the shareholder making the demand and state the claim with particularity.
