What is the test for establishing that a common fund has been created as a result of a shareholder's derivative action brought on behalf of all shareholders of a corporation?

California, United States of America


The following excerpt is from Baker v. Pratt, 176 Cal.App.3d 370, 222 Cal.Rptr. 253 (Cal. App. 1986):

The court found that this litigation was, in essence, a shareholder's derivative action brought on behalf of the corporation for the benefit of all the [176 Cal.App.3d 378] shareholders, that a common fund had been created as a result of the action, and by inference, that the litigation had resulted in "substantial benefit" to the corporation in that it had corrected or prevented " '... an abuse which would be prejudicial to the rights and interests of the corporation or affect the enjoyment or protection of an essential right to the stockholder's interests.' " (Citing Bosch v. Meeker Cooperative Light and Power Association (1960) 257 Minn. 362, 101 N.W.2d 423, 426.)

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