3.7.1.1 The company in a shareholder derivative lawsuit

Directors have fiduciary duties of loyalty and care to the corporation. If they fail to perform these duties, they are potentially causing direct harm to the corporate entity and indirect harm to others, including shareholders, creditors and employees. Only the corporation itself has the power to enforce and seek remedy for violations by directors. In recognition of this issue, corporate law allows shareholders to bring a suit on the corporation's behalf in a derivative lawsuit. This is described in more detail in sub-section 3.7.2.1 below.