{"data":{"id":"us-ky/krs-271b.7-400","jurisdiction":"us-ky","citation":"KRS 271B.7-400","heading":"Procedure in derivative proceedings -- Shareholders of a public","body":"benefit corporation.\n(1) A person shall not commence  a proceeding in the right of a domestic or foreign\ncorporation unless he  was  a  shareholder of the corporation when  the\ntransaction complained of occurred or unless he became  a shareholder\nthrough transfer by operation of law from one who was a shareholder at that\ntime. The derivative proceeding shall not be maintained if it appears that the\nperson commencing  the proceeding does not fairly and adequately represent\nthe interests of the shareholders in enforcing the right of the corporation.\n(2) A  complaint in a proceeding brought in the right of a corporation shall be\nverified and allege with particularity the demand  made, if any, to obtain action\nby the board of directors and either that the demand  was refused or ignored or\nwhy  he did not make  the demand. Whether or not a demand  for action was\nmade,  if the corporation commences  an investigation of the charges made  in\nthe demand  or complaint, the court may  stay any proceeding until the\ninvestigation is completed.\n(3) A  proceeding commenced  under this section may  not be discontinued or\nsettled without the court's approval. If the court determines that a proposed\ndiscontinuance or settlement will substantially affect the interest of the\ncorporation's shareholders or a class of shareholders, the court shall direct that\nnotice be given the shareholders affected.\n(4) On  termination of the proceeding the court may require the plaintiff to pay any\ndefendant's reasonable expenses,  including counsel fees, incurred in\ndefending the proceeding if it finds that the proceeding was  commenced\nwithout reasonable cause.\n(5) For purposes of this section, \"shareholder\" includes a beneficial owner whose\nshares are held in a voting trust or held by a nominee on his behalf.\n(6) In any derivative proceedings in the right of a foreign corporation, the matters\ncovered by this section shall be governed by the laws of the jurisdiction of\nincorporation.\n(7) The articles of incorporation of the corporation may provide that proper venue\nfor a derivative action or an action to compel the production of books and\nrecords is in or only is in the appropriate court.\n(8) Shareholders of a public benefit corporation owning individually or collectively,\nas of the date of instituting a derivative proceeding, at least two percent (2%) of\nthe corporation's outstanding shares or, in the case of a corporation with\nshares listed on a national securities exchange, the lesser of that percentage\nor shares of at least two million dollars ($2,000,000) in market value, may\nmaintain a derivative proceeding to enforce the requirements set forth in KRS\n271B.8-300(8).","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=45780","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:18Z","sha256":"4dede11d3ac4a3acff813af56a660d0ebd22ffe2264d62bef0a17210f6b31f77","source_id":"us-ky","stale":false,"prev":"us-ky/krs-271b.7-310","next":"us-ky/krs-271b.8-010"},"notice":"GroundRules: Original legal text. Not legal advice."}