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Edward Robson, Robson & Robson. Edward Robson, Robson & Robson.

Attorneys that represent shareholders of publicly traded companies in securities litigation are intimately familiar with the pre-suit demand required by the corporate law of many states. The purpose of the demand is to give the board of a company an opportunity to investigate and remedy alleged wrongdoing on the company’s behalf before a shareholder is permitted to bring a derivative action. In many states, including Delaware, a potential plaintiff is not required to make a pre-suit demand when the board is not capable of making an independent decision—typically because board members are accused of wrongdoing themselves. Pennsylvania’s business corporation law (BCL) does not include a “futility” exception and requires the prospective derivative plaintiff to make a pre-suit demand in nearly all circumstances.

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