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
ARBITRATOR’S DECISION FINDING CLAIMANT WAS PROPERLY DISCHARGED FOR MISCONDUCT ENTITLED TO COLLATERAL ESTOPPEL EFFECT IN THE UNEMPLOYMENT INSURANCE PROCEEDING (THIRD DEPT).
THERE WAS A QUESTION OF FACT WHETHER THE STORM-IN-PROGRESS DOCTRINE APPLIED IN THIS SIDEWALK SLIP AND FALL CASE; THEREFORE PLAINTIFFS DID NOT NEED TO DEMONSTRATE THE ICE WAS PREEXISTING (THIRD DEPT).
FAMILY COURT DID NOT PROPERLY APPLY THE STATUTORY FACTORS, FORUM NON CONVENIENS FINDING REVERSED.
DEFENDANTS FAILED TO MOVE FOR A MISTRIAL BASED ON PLAINTIFF’S COUNSEL’S ALLEGED BEHAVIOR PRIOR TO THE VERDICT; THE ALLEGED BEHAVIOR WAS NOT SO WRONGFUL OR PERVASIVE AS TO JUSTIFY SETTING ASIDE THE VERDICT IN THE INTEREST OF JUSTICE (THIRD DEPT). ​
ALTHOUGH THE SEQRA REVIEW OF THE PROPOSED MODIFICATION OF A LANDFILL WAS PROPERLY DONE, SUPREME COURT SHOULD NOT HAVE DETERMINED THAT NEARBY RESIDENTS DID NOT HAVE STANDING TO CONTEST THE RULING (THIRD DEPT).
HERE PLAINTIFF’S PROPOSED CONSTRUCTION OF APARTMENTS WAS PROHIBITED BY A LOCAL LAW; PLAINTIFF ALLEGED THE BIAS OF THE CHAIRPERSON OF THE PLANNING BOARD INFECTED THE PLANNING BOARD’S RECOMMENDATION TO THE TOWN BOARD (WHICH ENACTED THE LAW); THOSE ALLEGATIONS RAISED A QUESTION OF FACT PRECLUDING SUMMARY JUDGMENT FINDING THE LOCAL LAW VALID (THIRD DEPT).
MANY (BUT NOT ALL) CAUSES OF ACTION ALLOWED TO GO FORWARD IN AN ACTION AGAINST ADMINISTRATORS AND TRUSTEES OF A WORKERS’ COMPENSATION TRUST FOUND TO BE $188 MILLION IN DEBT.
Motion to Renew Based Upon New Evidence Should Have Been Granted/Request to Depose Knowledgeable Witnesses In Addition to the Witnesses Initially Provided by the Municipality Should Have Been Granted

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...