Despite these well-established, director-friendly procedures, there is much strategic drift in derivative litigation defense. Derivative Investigation Coverage An insuring agreement (known as "Side D" coverage) found within directors and officers ( D&O ) liability insurance policy forms. The derivative demand investigative cost coverage is normally subject to a Claims Made and Reported policy's timing requirements, i.e. Refusal to consider a demand, regardless of its source, is wrongful. (D) Derivative Demands The Insurer shall pay Investigation Costs on behalf of an Insured Entity that such Insured Entity incurs resulting from a Derivative Demand first made during the Policy Period or Extended Reporting Period, if applicable. Derived demand—in economics—is the demand for a good or service that results from the demand for a different, or related, good or service. Lawmakers Demand Investigation Of NIH ‘Secretively’ Funneling US Tax Dollars To Notorious Wuhan Lab. In a … Continued February 23, 2021 By Evita Duffy. Shareholder derivative actions pose unique pleading challenges designed by statute to preserve management's role in deciding the company's business affairs. Virginia Code § 13.1-672.1(B)(1) contains a written demand requirement before a shareholder is able to file a derivative action on behalf of a corporation. Such coverage pays the costs associated with investigations of an insured corporation, although only those involving shareholder derivative claims. This Insuring Agreement shall be subject to a Sub-limit of Liability of $500,000. Enter the derivative action. Allowing a special litigation committee (SLC) of the board to keep control of demand-excused litigation through an independent and thorough investigation. An investigation of reasonable scope is one that analyzes all relevant facts and sources of information that bear on the central allegations in the complaint. At its essence, a derivative suit is used as a means for a shareholder or group of shareholders, acting on behalf of the corporation, to reclaim value lost to the corporation by its management. Under Virginia law, a shareholder has no standing to maintain a derivative suit unless he first makes a written demand that the corporation bring suit in its own right. This week's New York Business Divorce highlights a pair of recent appellate rulings dismissing derivative actions for failure to plead demand futility with sufficient particularity. that the derivative demand must be first made and reported to the carrier during the policy period. The staff analysis of the proposed bill explained this change in express terms of demand futility, namely, that the change would “[a]llow a shareholder to initiate a derivative action without waiting 90 days for the corporation to respond to his or demand, if the shareholder is able to prove that such a demand is futile.” The differences among the states on derivative suits can be substantial; for example, whereas under Massachusetts law a shareholder is required to make demand on directors in every case alleging derivative claims on behalf of a corporation, see G.L. Essentially, the form of a derivative action is the same as the form of any other lawsuit. The interpretation offered by derivative plaintiffs is that Schick stands broadly for the proposition that a board's: Duty to consider and respond to a demand does not turn on the source of the demand, including one from a non-shareholder. Such Sub-limit

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