Question

Ruben is a shareholder of speed bikes company (sbc). when the directors fail to undertake an action to redress a wrong suffered by sbc, ruben files a suit on the firm's behalf.

Answer 1

This is an example of a derivative lawsuit, which is a suit brought by a shareholder on behalf of a company they invest in for wrongdoing by a 3rd party. Usually the shareholder can only do this when the company has cause for their own suit but has declined to take action for one reason or another.