The Vermont Statutes Online

Title 11C: Mututal Benefit Enterprises

Chapter 013: Action by Member

• § 1301. Derivative action

  A member may maintain a derivative action to enforce a right of a mutual benefit enterprise if:

  (1) the member demands that the enterprise bring an action to enforce the right; and

  (2) any of the following occur:

  (A) the enterprise does not, within 90 days after the member makes the demand, agree to bring the action;

  (B) the enterprise notifies the member that it has rejected the demand;

  (C) irreparable harm to the enterprise would result by waiting 90 days after the member makes the demand; or

  (D) the enterprise agrees to bring an action demanded and fails to bring the action within a reasonable time. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 1302. Proper plaintiff

  (a) A derivative action to enforce a right of a mutual benefit enterprise may be maintained only by a person that:

  (1) is a member or a dissociated member at the time the action is commenced and:

  (A) was a member when the conduct giving rise to the action occurred; or

  (B) whose status as a member devolved upon the person by operation of law or the organic rules from a person that was a member at the time of the conduct; and

  (2) adequately represents the interests of the enterprise.

  (b) If the sole plaintiff in a derivative action dies while the action is pending, the court may permit another member who meets the requirements of subsection (a) of this section to be substituted as plaintiff. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 1303. Pleading

  In a derivative action to enforce a right of a mutual benefit enterprise, the complaint shall state:

  (1) the date and content of the plaintiff’s demand under subdivision 1301(1) of this title and the enterprise’s response;

  (2) if 90 days have not expired since the demand, how irreparable harm to the enterprise would result by waiting for the expiration of 90 days; and

  (3) if the enterprise agreed to bring an action demanded, that the action has not been brought within a reasonable time. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 1304. Approval for discontinuance or settlement

  A derivative action to enforce a right of a mutual benefit enterprise may not be discontinued or settled without the court’s approval. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)

• § 1305. Proceeds and expenses

  (a) Except as otherwise provided in subsection (b) of this section:

  (1) any proceeds or other benefits of a derivative action to enforce a right of a mutual benefit enterprise, whether by judgment, compromise, or settlement, belong to the enterprise and not to the plaintiff; and

  (2) if the plaintiff in the derivative action receives any proceeds, the plaintiff shall immediately remit them to the enterprise.

  (b) If a derivative action to enforce a right of a mutual benefit enterprise is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney’s fees and costs, from the recovery of the enterprise. (Added 2011, No. 84 (Adj. Sess.), § 1, eff. April 20, 2012.)