Companies Law

Legal Action Initiated by Companies, Partners, or Shareholders 1. A company may initiate a derivative action against a manager or board members for any damage incurred by the company resulting from the violation of this Law or the company’s articles of incorporation or articles of association or from a wrongful act, negligence, or omission in the performance of their duties. The decision to initiate the action and to designate a representative on behalf of the company to pursue such action shall be made by the partners, general assembly, or shareholders. If the company is under liquidation, the liquidator shall initiate the action. If any liquidation proceedings are initiated against the company under the Bankruptcy Law, the action shall be initiated by its legal representative. 2. A single partner or shareholder, or more, representing 5% of the company’s capital, unless the company’s articles of incorporation or articles of association stipulate a lower percentage, may initiate a derivative action on behalf of the company if such action is not initiated by the company, provided the action serves the interests of the company and is based on valid grounds, and the plaintiff is acting in good faith and is a partner or shareholder in the company at the time of initiating the action. 3. To initiate the action referred to in paragraph (2) of this Article, the company’s manager or board members, as the case may be, shall be notified of the intent to initiate the action at least 14 days prior to the initiation date. 4. A partner or shareholder may initiate a private right of action against the manager or board members if the wrongful act attributed thereto results in a damage personally affecting him.