A direct action is a shareholder lawsuit to enforce a right that personally harms the shareholder, rather than the corporation. Which type of action is this?

A direct action is a shareholder lawsuit to enforce a right that personally harms the shareholder, rather than the corporation. Which type of action is this?

• A. Direct Action
• B. Derivative Action
• C. Class Action
• D. Injunction

Answer: (A)

Direct actions focus on protecting a shareholder’s personal rights. When the harm is to the shareholder personally—so the relief is for his own loss rather than for the corporation—the suit arises to enforce that individual right. This contrasts with derivative actions, where the shareholder sues to enforce the corporation’s claims and recovery goes to the corporation itself. Class actions involve many plaintiffs with a common claim against a defendant, not just one person’s personal harm. An injunction is a remedy (a court order) that can accompany suits but isn’t itself a type of action. Because the scenario describes enforcing a right that directly harms the shareholder personally, it fits a direct action.

Direct actions focus on protecting a shareholder’s personal rights. When the harm is to the shareholder personally—so the relief is for his own loss rather than for the corporation—the suit arises to enforce that individual right. This contrasts with derivative actions, where the shareholder sues to enforce the corporation’s claims and recovery goes to the corporation itself. Class actions involve many plaintiffs with a common claim against a defendant, not just one person’s personal harm. An injunction is a remedy (a court order) that can accompany suits but isn’t itself a type of action. Because the scenario describes enforcing a right that directly harms the shareholder personally, it fits a direct action.