The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Sun, 10 May 2026 11:30:48 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png The Demand Review Committee: How it Works, and How it Could Work Better – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 The Demand Review Committee: How it Works, and How it Could Work Better https://corpgov.law.harvard.edu/2018/05/14/the-demand-review-committee-how-it-works-and-how-it-could-work-better/?utm_source=rss&utm_medium=rss&utm_campaign=the-demand-review-committee-how-it-works-and-how-it-could-work-better https://corpgov.law.harvard.edu/2018/05/14/the-demand-review-committee-how-it-works-and-how-it-could-work-better/#comments Mon, 14 May 2018 13:15:19 +0000 https://corpgov.law.harvard.edu/?p=107243?d=20180514091519EDT Posted by Justice Collins J. Seitz, Jr. (Delaware Supreme Court), and S. Michael Sirkin (Ross Aronstam & Moritz), on Monday, May 14, 2018
Editor's Note:

Collins J. Seitz, Jr. is a Justice of the Delaware Supreme Court; and S. Michael Sirkin is a Partner at Ross Aronstam & Moritz LLP. This post is based on their recent article, published in The Business Lawyer, and is part of the Delaware law series; links to other posts in the series are available here.

In Delaware, stockholder derivative litigation follows a familiar path. The plaintiff files a complaint, alleging that demand is futile. The defendants move to dismiss under Court of Chancery Rule 23.1, arguing that the plaintiff failed to make a demand on the board of directors to bring the suit on behalf of the corporation. The motion is usually coupled with a motion to dismiss under Court of Chancery Rule 12(b)(6) for failure to state a claim. If the Court of Chancery grants the motion to dismiss on either ground, the matter ends.

What happens, though, if instead of pleading demand futility, the plaintiff actually makes a litigation demand? This path appears to be traveled less frequently, and appears to be less well understood by practitioners and directors. By making a demand on the board, the would-be plaintiff concedes that demand is not futile and that a majority of the board is capable of impartially considering the demand. As a result, an aggrieved stockholder who believes that the corporation is sitting on a valuable claim faces a stark choice between making a demand and attempting to plead demand futility.

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