Subsection 8 of A3123, now N.J.S.A.<\/span> 14A:3-6.8, states that if a shareholder or class action brings a derivative suit against a corporation that shareholder must either own 5% of the outstanding shares of any class or series of stock of the corporation, or own shares with a market value greater than $250,000.<\/p>\n

So what happens if a shareholder or class action brings a derivative suit but does not qualify under the 5% or $250,000 threshold?\u00a0 Under these circumstances, the corporation can require that the shareholder or class action to give security for reasonable expenses.\u00a0 The corporation can require this any time prior to final judgment of the derivative suit, and such expenses include attorney\u2019s fees for both the corporation and any third party\u2019s legal fees for which the corporation may be liable.<\/p>\n