In Re Schmitz

Texas law has recognized shareholder derivative suits for more than a century. 1 As such suits are nominally brought on a corporation’s behalf, we have long required that a shareholder first demand that the corporation bring the suit itself, unless such a demand would be futile. 2 But it does not appear we have ever specified what such a demand must include.

In 1997, the Legislature amended the Texas Business Corporation Act to require such demands in all cases (even if it is futile), and that the demand be made “with particularity.” The question here is whether a two-sentence demand was…