You are here: / / To Maintain Standing to Bring a Derivative Action Against a Not-for-Profit...

To Maintain Standing to Bring a Derivative Action Against a Not-for-Profit Corporation At Least Five Percent of the Members Must Be Plaintiffs at All Times As the Suit Progresses

The Third Department determined that in order to maintain standing for a derivative action against a not-for-profit corporation the plaintiffs must constitute five percent of the members at all times. In this case, the five percent requirement was met when lawsuit began but subsequently a member left and the five percent requirement was thereby no longer met:

N-PCL 623 is derived from the Business Corporation Law, but it is different in that it does not require ownership at the time of the transaction and does not allow plaintiffs to post security for expenses if they do not meet the five percent requirement (compare N-PCL 623, with Business Corporation Law §§ 626, 627). The requirement that plaintiffs in a derivative action against a not-for-profit corporation consist of at least five percent of any class of members was “necessitated by the elimination from the new law of the ‘security for expenses’ provision embodied in [Business Corporation Law § 627]” (Mem of Joint Legislative Committee to Study Revision of Corporation Laws, 1969 McKinney’s Session Laws of NY at 2485; see L 1969, ch 1066; see also E. Lisk Wyckoff, Jr., Practice Commentaries, McKinney’s Cons Laws of NY, Book 37, N-PCL 623). Because the N-PCL specifically eliminated the ability of less than five percent of shareholders to continue an action by posting security for expenses, we conclude that the ownership requirement of N-PCL 623 (a) must continue throughout the action in order to maintain standing … . Pall v McKenzie Homeowners’ Assn Inc, 2014 NY Slip Op 07392, 3rd Dept 10-3014

 

You might also like
THE BOARD’S CONCLUSION, BASED UPON EXPERT TESTIMONY, THAT CLAIMANT’S STROKE WAS CAUSED BY PRE-EXISTING MEDICAL CONDITIONS AND NOT THE WORK CONDITIONS AT THE TIME OF THE STROKE WAS SUPPORTED BY SUBSTANTIAL EVIDENCE AND THEREFORE CANNOT BE DISTURBED ON APPEAL (THIRD DEPT).
MATTER REMITTED TO THE COMMISSIONER OF HEALTH TO DETERMINE WHETHER BONE SURGERY TO REPAIR CANCER-RELATED DAMAGE TO PETITIONER’S JAW IS COVERED UNDER MEDICAID, IF THERE IS A CONFLICT BETWEEN THE DSS REGULATIONS AND THE DEPARTMENT OF HEALTH’S GUIDELINES, THE REGULATIONS CONTROL (THIRD DEPT).
A RECENT US SUPREME COURT RULING DOES NOT AFFECT THE NYS COURT OF APPEALS RULING THAT REGULATIONS REQUIRING HEALTH INSURANCE POLICIES TO COVER “MEDICALLY NECESSARY ABORTIONS” BUT WHICH EXEMPT POLICIES PROVIDED BY “RELIGIOUS EMPLOYERS” DO NOT IMPAIR THE FREE EXERCISE OF RELIGION (THIRD DEPT).
CLAIMANT DID NOT REMOVE HIMSELF FROM EXPOSURE TO HARMFUL NOISE FOR THREE MONTHS PRIOR TO APPLYING FOR WORKERS’ COMPENSATION FOR HEARING LOSS, CLAIM PROPERLY DENIED.
THE PARKER WARNINGS DID NOT SPECIFICALLY WARN DEFENDANT HIS SENTENCE WOULD BE ENHANCED IF HE WERE ARRESTED BETWEEN THE PLEA AND SENTENCING, DEFENSE COUNSEL WAS INEFFECTIVE FOR FAILING TO CHALLENGE THE ENHANCED SENTENCE ON THAT GROUND, MATTER REMITTED FOR SENTENCING TO THE AGREED TERM OR FOR AN OPPORTUNITY FOR DEFENDANT TO WITHDRAW HIS PLEA (THIRD DEPT).
ATTORNEY’S FEE FORM IMPROPERLY FILLED, IMPOSSIBLE FOR APPELLATE REVIEW OF $3000 AWARD.
Plaintiff Did Not Demonstrate Standing to Bring the Foreclosure Action
DEFENDANT WAS NOT GIVEN TIME TO EXERCISE HIS RIGHT TO APPEAR BEFORE THE GRAND JURY; INDICTMENT WAS PROPERLY DISMISSED (THIRD DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

Criteria for Court Review of Agency Action Explained Guilty Plea Based on a Sentence Promise that Neither the Court Nor the Parties...