February 8, 2023

Volume XIII, Number 39

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February 06, 2023

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Nevada Supreme Court Affirms Contemporaneous Ownership Requirement In LLC Derivative Action

In a short order of affirmance issued last week, the Nevada Supreme Court affirmed a basic requirement of derivative litigation. J. McDonald Co. v. Tropical & Losee, LLC, 2022 WL 6833521 (Nev. Oct. 11, 2022).  The case involved an attempt by J. McDonald Co., Inc. , a Texas corporation, to assert derivative claims on behalf of a Nevada limited liability company.  While one of the members of the LLC was J. McDonald Co., Inc., that corporation was a Nevada corporation whose charter had lapsed.  Because the Texas corporation by the same name had not been a member of the LLC, it lacked standing to pursue derivative claims on the LLC's behalf.   This seemingly should have been clear to the plaintiff because NRS 86.485 provides: "In a derivative action, the plaintiff must be a member at the time of the transaction of which the plaintiff complains."

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 292
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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