Montana Code 35-2-1304. Dismissal
35-2-1304. Dismissal. (1) The court shall dismiss a derivative proceeding on motion by the corporation if one of the groups specified in subsection (2) or (6) has determined in good faith, after conducting a reasonable inquiry upon which its conclusions are based, that the maintenance of the derivative proceeding is not in the best interests of the corporation.
Terms Used In Montana Code 35-2-1304
- board of directors: means the board of directors except that a person or group of persons is not the board of directors because of powers delegated to that person or group pursuant to 35-2-414. See Montana Code 35-2-114
- Complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means a public benefit corporation, mutual benefit corporation, or religious corporation. See Montana Code 35-2-114
- Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
- Directors: means individuals:
(a)designated in the articles or bylaws or elected by the incorporators and their successors; and
(b)elected or appointed by any other name or title to act as members of the board. See Montana Code 35-2-114
- Plaintiff: The person who files the complaint in a civil lawsuit.
- Proceeding: includes a civil suit and a criminal, administrative, and investigatory action. See Montana Code 35-2-114
- Quorum: The number of legislators that must be present to do business.
(2)Unless a panel is appointed pursuant to subsection (6), the determination in subsection (1) must be made by:
(a)a majority vote of independent directors present at a meeting of the board of directors if independent directors constitute a quorum; or
(b)a majority vote of a committee consisting of two or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not the independent directors constitute a quorum.
(3)None of the following may by itself cause a director to be considered not independent for purposes of this section:
(a)the nomination or election of the director by persons who are defendants in the derivative proceeding or against whom action is demanded;
(b)the naming of the director as a defendant in the derivative proceeding or as a defendant against whom action is demanded; or
(c)the approval by the director of the act being challenged in the derivative proceeding or demand if the act did not result in personal benefit to the director.
(4)If a derivative proceeding is commenced after a determination has been made rejecting a demand by a complainant, the complaint must allege with particularity facts establishing either that a majority of the board of directors did not consist of independent directors at the time the determination was made or that the requirements of subsection (1) have not been met.
(5)If a majority of the board of directors does not consist of independent directors at the time the determination is made, the corporation has the burden of proving that the requirements of subsection (1) have been met. If a majority of the board of directors consists of independent directors at the time the determination is made, the complainant has the burden of proving that the requirements of subsection (1) have not been met.
(6)Upon motion by the corporation, the court may appoint a panel of one or more independent persons to make a determination of whether the maintenance of the derivative proceeding is in the best interests of the corporation. In this case, the plaintiff has the burden of proving that the requirements of subsection (1) have not been met.