                                 CODE OF VIRGINIA

DISMISSAL (§ 13.1-672.4)

A. 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:

   1. Conducted a review and evaluation, adequately informed in the
   circumstances, of the allegations made in the demand or complaint;

   2. 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

   3. Submitted in support of the motion a short and concise statement of the
   reasons for its determination.

B. Unless a panel is appointed pursuant to subsection E, the determination in
subsection A shall be made by:

   1. A majority vote of disinterested directors present at a meeting of the
   board of directors if the disinterested directors constitute a quorum; or

   2. 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.

C. 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.

D. 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.

E. 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.

HISTORY: 1992, c. 802; 1993, c. 233; 2005, c. 765; 2019, c. 734.