15A:3-5. Provisions relating to actions in the right of a corporation

295 words·~1 min read·/nj/title-15a/chapter-3/15a-3-5

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

a. No action shall be brought in this State by a member in the right of a domestic or foreign corporation unless the plaintiff was a member at the time of the transaction of which the plaintiff complains.

b. In any action hereafter instituted in the right of the corporation by a member, the court having jurisdiction, upon final judgment and a finding that the action was brought without reasonable cause, may require the plaintiff to pay to the parties named as defendant the reasonable expenses, including fees of attorneys, incurred by them in the defense of the action.

c. In any action now pending or hereafter instituted or maintained in the right of the corporation by less than 5% of the members or any class of members, the corporation in whose right the action is brought shall be entitled at any time before final judgment to require the plaintiff to give security for the reasonable expenses, including fees of attorneys, that may be incurred by it in connection with the action or may be incurred by other parties named as defendant for which it may become legally liable.

The amount of the 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 the security in an amount as the court having jurisdiction shall determine upon the termination of the action.

d. This section shall not impair, restrict, or impose a condition on any right of a trustee of a corporation with or without members, to bring an action in this State in the right of a domestic or foreign corporation.

L.1983, c. 127, s. 15A:3-5, eff. Oct. 1, 1983.