2023 Wisconsin Statutes & Annotations › Chapter 180 - Business corporations. › 180.0744 - Dismissal.

180.0744
Dismissal.
(1)
The court shall dismiss a derivative proceeding on motion by the corporation if the court finds, subject to the burden of proof assigned under sub. (5) or (6), that one of the groups specified in sub. (2) or (6) has determined, acting in good faith after conducting a reasonable inquiry upon which its conclusions are based, that maintenance of the derivative proceeding is not in the best interests of the corporation.
(2)
Unless a panel is appointed under sub. (6), the determination in sub. (1) shall be made by any of the following:
(a)
A majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum.
(b)
A majority vote of a committee consisting of 2 or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not the voting, independent directors constitute a quorum.
(3)
Whether a director is independent for purposes of this section may not be determined solely on the basis of any one or more of the following factors:
(a)
The nomination or election of the director by persons who are defendants in the derivative proceeding or against whom action is demanded.
(b)
The naming of the director as a defendant in the derivative proceeding or as a person against whom action is demanded.
(c)
The approval by the director of the act being challenged in the derivative proceeding or demand if the act resulted in no personal benefit to the director.
(4)
If a derivative proceeding is commenced after a determination was made rejecting a demand by a shareholder or beneficial owner, the complaint shall allege with particularity facts establishing any of the following:
(a)
That a majority of the board of directors did not consist of independent directors at the time that the determination was made.
(b)
That the requirements of sub. (1) have not been met.
(5)
If a majority of the board of directors did not consist of independent directors at the time that the determination rejecting a demand was made, the corporation shall have the burden of proving that the requirements of sub. (1) have been met. If a majority of the board of directors consisted of independent directors at the time that the determination was made, the shareholder or beneficial owner shall have the burden of proving that the requirements of sub. (1) have not been met.
(6)
Upon motion by the corporation, the court may appoint a panel of one or more independent persons to determine whether maintenance of the derivative proceeding is in the best interests of the corporation. If a panel is appointed under this subsection, the shareholder or beneficial owner shall have the burden of proving that the requirements of sub. (1) have not been met.
History:  1991 a. 16, 173.
A special litigation committee formed under sub. (2) (b) shall be examined carefully by a circuit court to determine whether its members are independent. The test is whether a committee member has a relationship with a defendant or the corporation that would be reasonably expected to affect the member's judgment with respect to litigation in issue. Einhorn v. Culea, 2000 WI 65, 235 Wis. 2d 646, 612 N.W.2d 78, 97-3592.