N.Y. Business Corporation Law § 626: Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor

§ 626. Shareholders' derivative action brought in the right of the

corporation to procure a judgment in its favor.

(a) An action may be brought in the right of a domestic or foreign

corporation to procure a judgment in its favor, by a holder of shares or

of voting trust certificates of the corporation or of a beneficial

interest in such shares or certificates.

(b) In any such action, it shall be made to appear that the plaintiff

is such a holder at the time of bringing the action and that he was such

a holder at the time of the transaction of which he complains, or that

his shares or his interest therein devolved upon him by operation of

law.

(c) In any such action, the complaint shall set forth with

particularity the efforts of the plaintiff to secure the initiation of

such action by the board or the reasons for not making such effort.

(d) Such action shall not be discontinued, compromised or settled,

without the approval of the court having jurisdiction of the action. If

the court shall determine that the interests of the shareholders or any

class or classes thereof will be substantially affected by such

discontinuance, compromise, or settlement, the court, in its discretion,

may direct that notice, by publication or otherwise, shall be given to

the shareholders or class or classes thereof whose interests it

determines will be so affected; if notice is so directed to be given,

the court may determine which one or more of the parties to the action

shall bear the expense of giving the same, in such amount as the court

shall determine and find to be reasonable in the circumstances, and the

amount of such expense shall be awarded as special costs of the action

and recoverable in the same manner as statutory taxable costs.

(e) If the action on behalf of the corporation was successful, in

whole or in part, or if anything was received by the plaintiff or

plaintiffs or a claimant or claimants as the result of a judgment,

compromise or settlement of an action or claim, the court may award the

plaintiff or plaintiffs, claimant or claimants, reasonable expenses,

including reasonable attorney's fees, and shall direct him or them to

account to the corporation for the remainder of the proceeds so received

by him or them. This paragraph shall not apply to any judgment rendered

for the benefit of injured shareholders only and limited to a recovery

of the loss or damage sustained by them.