Who pays when shareholders sue their own company?

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I mean, they own the company, and if the company has to pay the shareholders then they’re basically paying themselves right?

To clarify – it’s when the company is sued, not the executives.

In: Economics

3 Answers

Anonymous 0 Comments

Shareholders sue the executives for whatever negligent action and typically the D&O policy kicks in, not the business entity itself.

Such as “Tesla share price too high imo” shareholders sue Musk..

Tim Cook as I understand it.. is being sued but it’s hush hush at present, I used to work for their current broker and heard stories today. They’ve largely fucked the claim up by not filing it in good time and trying to lawyer their way out of it.

But shareholders below a set threshold aren’t an entity of the business but an interested party.

Reading into directors and officers insurance is the way to learn about this.

Edit to add, once you are a shareholder over a set threshold, something called insured v insured kicks in and thus you are suing yourself and insurance doesn’t kick in. You need a large amount though. Like 15% upwards.

Anonymous 0 Comments

When shareholders sue their own company it is usually about things like, these specific people got shares they shouldn’t have so take it back and give it equally to all shareholders.

Suing for a lump sum of cash is as you probably assumed pretty useless since it just takes the money from themselves.

Anonymous 0 Comments

What if there is no D & O policy?