You are here: / / UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF...

UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Acosta, in a case sent back by the Court of Appeals, affirmed Supreme Court’s dismissal of the shareholder’s derivative causes of action. The derivative action was initially dismissed for failure to comply with a Cayman Islands rule. The Court of Appeals held that the rule was procedural and did not apply in New York courts. The First Department determined the derivative causes of action must be dismissed because plaintiff does not have standing pursuant to Foss v Harbottle, 67 Eng Rep 189 (1843), as interpreted under Cayman Islands law:

Under Cayman Islands law interpreting Foss, “derivative claims are owned and controlled by the company, not its shareholders” … . Thus, “a shareholder is not permitted to bring a derivative action on behalf of that company” … .

Cayman Islands law recognizes only four narrow exceptions to the Foss rule: “(1) if the conduct infringed on the shareholder’s personal rights; (2) if the conduct would require a special majority to ratify; (3) if the conduct qualifies as a fraud on the minority; or (4) if the conduct consists of ultra vires acts … . Here, the only exception at issue is the “fraud on the minority” exception. In order to invoke that exception, plaintiff must plead and prove that the alleged wrongdoers controlled a majority of the stock with voting rights and that those wrongdoers committed fraud … . Control may be sufficiently pleaded by showing that the wrongdoers own a majority of the corporation’s voting shares or have acquired de facto control of those voting shares … .

We agree with the motion court that the complaint is devoid of any allegations establishing either form of control. Davis v Scottish Re Group Ltd., 2018 NY Slip Op 01889, First Dept 3-20-18

CORPORATION LAW (SHAREHOLDER’S DERIVATIVE ACTION, UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT))/SHAREHOLDER’S DERIVATIVE ACTION (UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT))/CAYMAN ISLANDS (CORPORATION LAW,  UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT))

You might also like
WHERE THERE IS AN INCONSISTENCY BETWEEN AN ORDER OR A JUDGMENT AND THE DECISION UPON WHICH IT IS BASED, THE DECISION CONTROLS (FIRST DEPT).
WITNESS’S DISAVOWED IDENTIFICATION OF ANOTHER AS THE PERPETRATOR COULD NOT BE USED AFFIRMATIVELY BY THE DEFENDANT AS EVIDENCE OF THIRD-PARTY CULPABILITY.
Even Though the People Indicated They Were Not Ready for Trial After Filing a Certificate of Readiness, the Presumption the Statement of Readiness Was Accurate and Truthful When Made Was Not Rebutted/How to Interpret a Plurality Opinion by the Court of Appeals Explained
A THEORY ASSERTED FOR THE FIRST TIME IN OPPOSITION TO DEFENDANT’S SUMMARY JUDGMENT MOTION, AFTER DISCOVERY HAD ENDED, SHOULD NOT HAVE BEEN CONSIDERED (FIRST DEPT).
TWO VOLUNTARY DISCONTINUANCES OF TWO SUCCESSIVE FORECLOSURE ACTIONS TWICE REVOKED THE ACCELERATION OF THE DEBT RENDERING THE THIRD FORECLOSURE ACTION TIMELY (FIRST DEPT).
Contract with Construction Manager Did Not Give the Manager Sufficient Supervisory Control to Impose Liability Under Labor Law 200, 240 (1) or 246 (1)
Denial of “For Cause” Challenges to Jurors Who Said They Needed to Hear “Both Sides of the Story” Required Reversal
NYC Fire Department Cannot Be Compelled to Bargain Over the “Zero Tolerance” Drug-Test Policy for EMS Personnel

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

ALTHOUGH THE COMPLAINT BY SHAREHOLDERS AGAINST DIRECTORS DID NOT SUFFICIENTLY... SUMMARY JUDGMENT PROPERLY GRANTED ON THE LABOR LAW 240 (1) CAUSE OF ACTION BASED...