{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/13.1-672.4.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/13.1-672.4.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/13.1-672.4.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/13.1-672.4.html"}],"law_id":78141,"edition_id":1,"section_id":78141,"structure_id":13262,"section_number":"13.1-672.4","catch_line":"Dismissal","history":"1992, c. 802; 1993, c. 233; 2005, c. 765; 2019, c. 734.","full_text":"A\n\nA derivative proceeding shall be dismissed by the court on motion by the corporation if one of the groups specified in subsection B or E has:1\n\nConducted a review and evaluation, adequately informed in the circumstances, of the allegations made in the demand or complaint;2\n\nDetermined in good faith on the basis of that review and evaluation that the maintenance of the derivative proceeding is not in the best interests of the corporation; and3\n\nSubmitted in support of the motion a short and concise statement of the reasons for its determination.B\n\nUnless a panel is appointed pursuant to subsection E, the determination in subsection A shall be made by:1\n\nA majority vote of disinterested directors present at a meeting of the board of directors if the disinterested directors constitute a quorum; or2\n\nA majority vote of a committee consisting of two or more disinterested directors appointed by a majority vote of disinterested directors present at a meeting of the board of directors, regardless of whether such disinterested directors constituted a quorum.C\n\nIf a derivative proceeding is commenced after a determination has been made rejecting a demand by a shareholder, the complaint shall allege with particularity facts establishing that the requirements of subsection A or B have not been met. With respect to any allegation that the requirements of subsection A or B have not been met, the plaintiff shall be entitled to discovery if, and only with respect to, facts that are alleged in the complaint with particularity.D\n\nThe plaintiff shall have the burden of proving that the requirements of subsection A or B have not been met, except that the corporation shall have the burden with respect to the issue of disinterestedness under subsection B if the complaint alleges with particularity facts raising a substantial question as to such disinterestedness.E\n\nUpon motion by the corporation, the court may appoint a panel of disinterested persons to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation.","order_by":null,"text":{"0":{"id":280104,"text":"A derivative proceeding shall be dismissed by the court on motion by the corporation if one of the groups specified in subsection B or E has:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":280105,"text":"Conducted a review and evaluation, adequately informed in the circumstances, of the allegations made in the demand or complaint;","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":280106,"text":"Determined in good faith on the basis of that review and evaluation that the maintenance of the derivative proceeding is not in the best interests of the corporation; and","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"A3"},"3":{"id":280107,"text":"Submitted in support of the motion a short and concise statement of the reasons for its determination.","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"B"},"4":{"id":280108,"text":"Unless a panel is appointed pursuant to subsection E, the determination in subsection A shall be made by:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A3","next_prefix":"B1"},"5":{"id":280109,"text":"A majority vote of disinterested directors present at a meeting of the board of directors if the disinterested directors constitute a quorum; or","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"6":{"id":280110,"text":"A majority vote of a committee consisting of two or more disinterested directors appointed by a majority vote of disinterested directors present at a meeting of the board of directors, regardless of whether such disinterested directors constituted a quorum.","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"C"},"7":{"id":280111,"text":"If a derivative proceeding is commenced after a determination has been made rejecting a demand by a shareholder, the complaint shall allege with particularity facts establishing that the requirements of subsection A or B have not been met. With respect to any allegation that the requirements of subsection A or B have not been met, the plaintiff shall be entitled to discovery if, and only with respect to, facts that are alleged in the complaint with particularity.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B2","next_prefix":"D"},"8":{"id":280112,"text":"The plaintiff shall have the burden of proving that the requirements of subsection A or B have not been met, except that the corporation shall have the burden with respect to the issue of disinterestedness under subsection B if the complaint alleges with particularity facts raising a substantial question as to such disinterestedness.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"9":{"id":280113,"text":"Upon motion by the corporation, the court may appoint a panel of disinterested persons to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D"}},"ancestry":[{"id":13262,"edition_id":1,"name":"Derivative Proceedings and Other Shareholder Actions","identifier":"8.1","label":"article","depth":3,"order_by":1,"parent_id":12983,"metadata":{},"date_created":"2026-06-26 03:44:32","date_modified":"2026-06-26 03:44:32","permalink":{"id":151139,"object_type":"structure","relational_id":13262,"identifier":"8.1","token":"13.1\/9\/8.1","url":"\/13.1\/9\/8.1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12983,"edition_id":1,"name":"Virginia Stock Corporation Act","identifier":"9","label":"chapter","depth":2,"order_by":1,"parent_id":12744,"metadata":{},"date_created":"2026-06-26 03:44:06","date_modified":"2026-06-26 03:44:06","permalink":{"id":150163,"object_type":"structure","relational_id":12983,"identifier":"9","token":"13.1\/9","url":"\/13.1\/9\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12744,"edition_id":1,"name":"Corporations","identifier":"13.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:51","date_modified":"2026-06-26 03:43:51","permalink":{"id":147493,"object_type":"structure","relational_id":12744,"identifier":"13.1","token":"13.1","url":"\/13.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":54967,"structure_id":13262,"section_number":"13.1-672.1","catch_line":"Standing; condition precedent; stay of proceedings","url":"\/13.1-672.1\/","token":"13.1\/9\/8.1\/13.1-672.1","metadata":false},{"id":83444,"structure_id":13262,"section_number":"13.1-672.2","catch_line":"Discontinuance or settlement","url":"\/13.1-672.2\/","token":"13.1\/9\/8.1\/13.1-672.2","metadata":false},{"id":75549,"structure_id":13262,"section_number":"13.1-672.3","catch_line":"Foreign corporations","url":"\/13.1-672.3\/","token":"13.1\/9\/8.1\/13.1-672.3","metadata":false},{"id":78141,"structure_id":13262,"section_number":"13.1-672.4","catch_line":"Dismissal","url":"\/13.1-672.4\/","token":"13.1\/9\/8.1\/13.1-672.4","metadata":false},{"id":54261,"structure_id":13262,"section_number":"13.1-672.5","catch_line":"Payment of and security for expenses","url":"\/13.1-672.5\/","token":"13.1\/9\/8.1\/13.1-672.5","metadata":false},{"id":73185,"structure_id":13262,"section_number":"13.1-672.6","catch_line":"Shareholder action to appoint a custodian or receiver for a public corporation","url":"\/13.1-672.6\/","token":"13.1\/9\/8.1\/13.1-672.6","metadata":false},{"id":69015,"structure_id":13262,"section_number":"13.1-672.7","catch_line":"Shareholder defined","url":"\/13.1-672.7\/","token":"13.1\/9\/8.1\/13.1-672.7","metadata":false}],"previous_section":{"id":75549,"structure_id":13262,"section_number":"13.1-672.3","catch_line":"Foreign corporations","url":"\/13.1-672.3\/","token":"13.1\/9\/8.1\/13.1-672.3","metadata":false},"next_section":{"id":54261,"structure_id":13262,"section_number":"13.1-672.5","catch_line":"Payment of and security for expenses","url":"\/13.1-672.5\/","token":"13.1\/9\/8.1\/13.1-672.5","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/13.1-672.4\/","history_text":"

This law was first created in 1992. The record of its establishment is cataloged in chapter 802 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1992 \u201cActs\u201d aren\u2019t available online. It has been modified 3 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1993, chapter 233; in 2005, chapter 765<\/a>; in 2019, chapter 734<\/a>.<\/p>","references":[{"id":83518,"section_number":"13.1-603","catch_line":"Definitions","order_by":null,"url":"\/13.1-603\/"},{"id":75549,"section_number":"13.1-672.3","catch_line":"Foreign corporations","order_by":null,"url":"\/13.1-672.3\/"}],"refers_to":false,"permalink":{"id":151153,"object_type":"law","relational_id":78141,"identifier":"13.1-672.4","token":"13.1\/9\/8.1\/13.1-672.4","url":"\/13.1-672.4\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/13.1-672.4\/","token":"13.1\/9\/8.1\/13.1-672.4","dublin_core":{"Title":"Dismissal","Type":"Text","Format":"text\/html","Identifier":"\u00a7 13.1-672.4","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> A derivative proceeding<\/span> shall be dismissed by the court<\/span> on motion<\/span> by the corporation<\/span> if one of the groups specified in subsection B or E has: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Conducted a review and evaluation, adequately informed in the circumstances, of the allegations<\/span> made in the demand or complaint; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Determined in good faith on the basis of that review and evaluation that the maintenance of the derivative proceeding<\/span> is not in the best interests<\/span> of the corporation<\/span>; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Submitted in support of the motion<\/span> a short and concise statement of the reasons for its determination. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> Unless a panel<\/span> is appointed pursuant to subsection E, the determination in subsection A shall be made by: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> A majority vote of disinterested directors present at a meeting of the board of directors if the disinterested directors constitute a quorum; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> A majority vote of a committee consisting of two or more disinterested directors appointed by a majority vote of disinterested directors present at a meeting of the board of directors, regardless of whether such disinterested directors constituted a quorum. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> If a derivative proceeding<\/span> is commenced after a determination has been made rejecting a demand by a shareholder<\/span>, the complaint shall allege with particularity facts<\/span> establishing that the requirements of subsection A or B have not been met. With respect to any allegation<\/span> that the requirements of subsection A or B have not been met, the plaintiff<\/span> shall be entitled to discovery<\/span> if, and only with respect to, facts<\/span> that are alleged in the complaint with particularity. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> The plaintiff<\/span> shall have the burden of proving that the requirements of subsection A or B have not been met, except that the corporation<\/span> shall have the burden with respect to the issue<\/span> of disinterestedness under subsection B if the complaint alleges with particularity facts<\/span> raising a substantial question as to such disinterestedness. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> Upon motion<\/span> by the corporation<\/span>, the court<\/span> may appoint a panel<\/span> of disinterested persons<\/span> to make a determination whether the maintenance of the derivative proceeding<\/span> is in the best interests<\/span> of the corporation<\/span>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nDISMISSAL (\u00a7 13.1-672.4)\n\nA. A derivative proceeding shall be dismissed by the court on motion by the\ncorporation if one of the groups specified in subsection B or E has:\n\n 1. Conducted a review and evaluation, adequately informed in the\n circumstances, of the allegations made in the demand or complaint;\n\n 2. Determined in good faith on the basis of that review and evaluation that\n the maintenance of the derivative proceeding is not in the best interests of\n the corporation; and\n\n 3. Submitted in support of the motion a short and concise statement of the\n reasons for its determination.\n\nB. Unless a panel is appointed pursuant to subsection E, the determination in\nsubsection A shall be made by:\n\n 1. A majority vote of disinterested directors present at a meeting of the\n board of directors if the disinterested directors constitute a quorum; or\n\n 2. A majority vote of a committee consisting of two or more disinterested\n directors appointed by a majority vote of disinterested directors present at a\n meeting of the board of directors, regardless of whether such disinterested\n directors constituted a quorum.\n\nC. If a derivative proceeding is commenced after a determination has been made\nrejecting a demand by a shareholder, the complaint shall allege with\nparticularity facts establishing that the requirements of subsection A or B have\nnot been met. With respect to any allegation that the requirements of subsection\nA or B have not been met, the plaintiff shall be entitled to discovery if, and\nonly with respect to, facts that are alleged in the complaint with\nparticularity.\n\nD. The plaintiff shall have the burden of proving that the requirements of\nsubsection A or B have not been met, except that the corporation shall have the\nburden with respect to the issue of disinterestedness under subsection B if the\ncomplaint alleges with particularity facts raising a substantial question as to\nsuch disinterestedness.\n\nE. Upon motion by the corporation, the court may appoint a panel of\ndisinterested persons to make a determination whether the maintenance of the\nderivative proceeding is in the best interests of the corporation.\n\nHISTORY: 1992, c. 802; 1993, c. 233; 2005, c. 765; 2019, c. 734.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}