What is a stockholder's derivative action?

A stockholder's derivative action is a legal mechanism that allows a stockholder to initiate a lawsuit on behalf of a corporation, typically against officers or directors of the corporation for misconduct, negligence, or breach of fiduciary duty. This type of action arises when the corporation itself fails to take action against the individuals responsible for harming the corporation, and the stockholder steps in to protect the interests of the corporation and its shareholders.

In a derivative action, any recovery obtained typically goes back to the corporation rather than the individual stockholder who initiated the lawsuit. The ability to bring such an action underscores the principle that stockholders have a vested interest in the management of the corporations in which they hold shares, and it serves as a check on corporate governance.

The other options describe different legal concepts that do not align with the nature of a derivative action. A lawsuit filed by a corporation against its stockholders would not fall under the definition of a derivative action. Likewise, a complaint against a third party for recovering corporate losses does not typically represent a derivative action; it's more aligned with direct corporate claims. Finally, a defense used by corporations in contract disputes does not relate to stockholder actions, as it involves the corporation's responses in litigation rather than actions initiated by shareholders.