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Abstract: 

Delaware and Pennsylvania take different approaches to derivative litigation. While both states require stockholders to make a demand upon the corporation, Delaware allows demand to be excused if the stockholder can show that a majority of the board is incapable of making an impartial decision regarding the litigation. In contrast, Pennsylvania does not recognize the concept of demand futility and provides that a corporation can establish a Special Litigation Committee to determine whether pursuing litigation is in the best interests of the corporation. Understanding these differences is essential for effectively navigating derivative litigation in these jurisdictions.

Keywords: Derivative Litigation in Delaware and Pennsylvania; Wrongful Refusal; Demand Futility; Pennsylvania Special Litigation Committees

Affiliations:  1: Troutman Pepper Locke, LLP; 2: Troutman Pepper; 3: Troutman Pepper.