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386A.6-110 Action by beneficial owner.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
A beneficial owner may maintain a direct action against a statutory trust or a trustee
to redress an injury sustained by, or to enforce a duty owed to, the beneficial owner
if the beneficial owner can prevail without showing an injury or breach of duty to
the trust.
A beneficial owner may maintain a derivative action to redress an injury sustained
by or enforce a duty owed to a statutory trust if:
(a) The beneficial owner first makes a demand on the trustees, requesting that the
trustees cause the trust to bring an action to redress the injury or enforce the
right, and the trustees do not bring the action within a reasonable time; or
(b) A demand would be futile.
A derivative action on behalf of a statutory trust may be maintained only by a
person that is a beneficial owner at the time the action is commenced and who:
(a) Was a beneficial owner when the conduct giving rise to the action occurred; or
(b) Acquired the status as a beneficial owner by operation of law or pursuant to
the terms of the governing instrument from a person that was a beneficial
owner at the time of the conduct giving rise to the action occurred.
In a derivative action on behalf of the statutory trust, the complaint must state with
particularity:
(a) The date and content of the plaintiff's demand and the trustees' response to the
demand; or
(b) The reason the demand should be excused as futile.
Except as otherwise provided in subsection (6) of this section:
(a) Any proceeds or other benefits of a derivative action on behalf of a statutory
trust, whether by judgment, compromise or settlement, are the property of the
trust and not of the plaintiff; and
(b) If the plaintiff receives any proceeds or other benefits, the plaintiff shall
immediately remit them to the trust.
A derivative action on behalf of a statutory trust may not be voluntarily dismissed or
settled without the court's approval.
The proper venue for a direct action under subsection (1) of this section or a
derivative action in which the action is brought solely against one (1) or more
trustees shall be an appropriate court.
A beneficial owner associated with a series, if the series may pursuant to KRS
386A.4-010(4) be sued in its own name, may bring an action pursuant to subsection
(1) or (2) of this section against only that series, the trustees associated with the
series, or both. If brought only against a series or the trustees associated with the
series, any demand made pursuant to subsection (2)(a) of this section shall be upon
the trustees associated with the series.
On termination of the proceeding brought pursuant to this section, the court may:
(a) Require the plaintiff to pay any defendant's reasonable expenses, including
(b)
counsel fees, incurred in defending the proceeding to the extent it finds that
the proceeding or any portion thereof was commenced without reasonable
cause or for an improper purpose; and
Require the statutory trust, or as appropriate a series thereof, to pay the
plaintiff's reasonable expenses, including counsel fees, incurred in the
proceeding if it finds that the proceeding has resulted in a substantial benefit
to the statutory trust or to a series thereof.
Effective: July 12, 2012
History: Created 2012 Ky. Acts ch. 81, sec. 55, effective July 12, 2012.
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