Supreme Court of Texas, No. 12-0045 (May 29, 2015)
Opinion by Justice Green
Last summer in Ritchie v. Rupe, when the Supreme Court of Texas killed off the cause of action for “minority shareholder oppression,” it pointed to shareholder derivative claims as an alternative that shareholders in closely held corporations might pursue. Now, in Sneed v. Webre, the Court has articulated several important principles with respect to such derivative cases:
- The “business judgment rule” applies as a defense to derivative claims involving closely held corporations, just as it does in other cases;
- The courts cannot create by implication prerequisites or requirements for a derivative suit involving a closely held corporation that the Legislature has expressly removed by statute; and
- Texas “recognizes the availability of double-derivative standing for shareholders of a closely held parent corporation to assert a derivative action on behalf of a wholly-owned subsidiary.
