North Carolina Shareholder Disputes

Partnership Breakups and Derivative Actions

Conflicts among shareholders or partners in closely held companies are common. They can arise from various issues, including management disagreements, diversion of company assets or opportunities, or breaches of duty. At Lord & Lindley, we have experience in navigating these disputes with precision and expertise. We craft personalized strategies for each client, leveraging negotiation, mediation, arbitration, or litigation to achieve resolution.

Lord & Lindley's attorneys also have significant experience handling derivative lawsuits. In a derivative suit, a member or shareholder's claims stem from rights the company owns, rather than direct claims that the owner has in his or her individual capacity. Because the claims are not direct, but derive from the company, North Carolina statutes have special rules for these types of cases. As a result, these cases tend to be especially complex, and require experienced counsel to navigate.

Frequently Asked Questions About Derivative Actions

Derivative actions for Corporations are governed by N.C. Gen. Stat. §§ 55‑7‑40 et seq. (, while derivative actions for Limited Liability Companies are governed by N.C. Gen. Stat. §§ 57D-8-01 et seq. (

Yes. For both corporations and limited liability companies, an owner must make a written demand on the company for the company to take "suitable action," and either (1) the company rejected the member's demand, (2) 90 days have passed since the date the owner made the demand, or (3) irreparable injury to the company would result by waiting for the expiration of the 90‑day period.

Not without court permission. Pursuant to N.C. Gen. Stat. §§ 55-7-45 and 57D-8-04, "[a] derivative proceeding may not be discontinued or settled without the court's approval."

Yes,in the Court's discretion. N.C. Gen. Stat. §§ 55-7-46 and 57D-8-05 provide for the recovery of attorneys' fees in certain circumstances for corporations and limited liability companies, respectively. But because the award of attorneys' fees is discretionary (meaning that it is up to the judge) parties should assume that they will be responsible for paying their own attorneys and not rely on the notion that the other side will reimburse them.

Yes. Pursuant to N.C. Gen. Stat. § 7A‑45.4, a party generally may designate a case to the Business Court if the dispute involves the law governing corporations, partnerships, and/or limited liability companies.