2010 Pennsylvania Code
Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
Chapter 17 - Officers, Directors and Shareholders
1782 - Actions against directors and officers.

     § 1782.  Actions against directors and officers.
        (a)  General rule.--Except as provided in subsection (b), in
     any action or proceeding brought to enforce a secondary right on
     the part of one or more shareholders of a business corporation
     against any present or former officer or director of the
     corporation because the corporation refuses to enforce rights
     that may properly be asserted by it, each plaintiff must aver
     and it must be made to appear that each plaintiff was a
     shareholder of the corporation or owner of a beneficial interest
     in the shares at the time of the transaction of which he
     complains, or that his shares or beneficial interest in the
     shares devolved upon him by operation of law from a person who
     was a shareholder or owner of a beneficial interest in the
     shares at that time.
        (b)  Exception.--Any shareholder or person beneficially
     interested in shares of the corporation who, except for the
     provisions of subsection (a), would be entitled to maintain the
     action or proceeding and who does not meet such requirements
     may, nevertheless in the discretion of the court, be allowed to
     maintain the action or proceeding on preliminary showing to the
     court, by application and upon such verified statements and
     depositions as may be required by the court, that there is a
     strong prima facie case in favor of the claim asserted on behalf
     of the corporation and that without the action serious injustice
     will result.
        (c)  Security for costs.--In any action or proceeding
     instituted or maintained by holders or owners of less than 5% of
     the outstanding shares of any class of the corporation, unless
     the shares held or owned by the holders or owners have an
     aggregate fair market value in excess of $200,000, the
     corporation in whose right the action or proceeding is brought
     shall be entitled at any stage of the proceedings to require the
     plaintiffs to give security for the reasonable expenses,
     including attorneys' fees, that may be incurred by it in
     connection therewith or for which it may become liable pursuant
     to section 1743 (relating to mandatory indemnification) (but
     only insofar as relates to actions by or in the right of the
     corporation) to which security the corporation shall have
     recourse in such amount as the court determines upon the
     termination of the action or proceeding. The amount of security
     may, from time to time, be increased or decreased in the
     discretion of the court upon showing that the security provided
     has or may become inadequate or excessive. The security may be
     denied or limited in the discretion of the court upon
     preliminary showing to the court, by application and upon such
     verified statements and depositions as may be required by the
     court, establishing prima facie that the requirement of full or
     partial security would impose undue hardship on plaintiffs and
     serious injustice would result.
        (d)  Cross reference.--See section 4146 (relating to
     provisions applicable to all foreign corporations).

        Suspension by Court Rule.  Section 1782(a) and (b) were
     suspended by Pennsylvania Rule of Civil Procedure No. 1506(e),
     amended April 12, 1999, insofar as inconsistent with Rule No.
     1506 relating to stockholder's derivative action. Rule No.
     1506(e) further provided that section 1782(c) and (d) shall not
     be deemed suspended or affected by Rule No. 1506.
        Cross References.  Section 1782 is referred to in section
     4146 of this title.