N.Y. Not-for-Profit Corporation Law § 623: Members' derivative action brought in the right of the corporation to procure a judgment in its favor

§ 623. Members' 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 five percent or more

of any class of members or by such percentage of the holders of capital

certificates or of the owners of a beneficial interest in the capital

certificates of such corporation.

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

is such a member, holder or owner at the time of bringing the action.

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

particularity the efforts of the plaintiff or plaintiffs to secure the

initiation of such action by the board of the reason 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 members or of 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 members 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 members or non-record owners only and limited

to a recovery of the loss or damage sustained by them.