The following is not meant to be legal advice.
If a corporation suffers an injury, a shareholder may bring a derivative suit on behalf of the corporation. The requirements include: shareholder must be a contemporaneous holder of shares at the time of the injury through the time of judgment, shareholder must demand that the directors sue to redress the injury, unless a demand would be futile, shareholder must first give the shareholders the opportunity to ratify the injurious transaction (traditionally), the shareholder may be required to post a bond. For example, a shareholder who continuously has 1% satisfies the first element.
Traditionally, a shareholder owed no fiduciary duty to the corporation or other shareholders. The modern trend is to find that controlling shareholders owe a fiduciary duty to the corporation and minority shareholders. For example, a shareholder who owns 30% of common stock in a company is a controlling shareholder, and if the company is public, the shareholder usually needs to make a Form 13G filing with the SEC.
A controlling shareholder cannot sell a controlling block of shares if he knows or has reason to know that the purchaser intends to injure the corporation or the minority shareholders. For example, a controlling shareholder needs to make investigations on a company’s intentions for the future.
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