In an action brought to enforce a secondary right on the part of one or more shareholders in an association, incorporated or unincorporated, because the association refuses to enforce rights which may properly be asserted by it, the complaint shall be verified and allege that the plaintiff was a shareholder at the time of the transaction complained of, or that the share thereafter devolved by operation of law. The complaint shall also set forth with particularity the efforts of the plaintiff to secure from the managing directors or trustees and, if necessary, from the shareholders such action as is desired, and the reasons for the failure to obtain such action or the reasons for not making such effort. Immediately on filing the complaint and issuing the summons, the plaintiff shall give such notice of the pendency and object of the action to the other shareholders as the court by order directs. The derivative action may not be maintained if it appears that the plaintiff does not fairly represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. Rule 4:32-2(e) (“Settlement, Voluntary Dismissal, or Compromise”) is applicable to actions brought under this rule.
Rule 4:32-3.Derivative Action by Shareholders
Last amended September 1, 2006 · Current through June 18, 2026 · Last verified July 7, 2026
In one sentenceRule 4:32-3 governs shareholder derivative actions, requiring a verified complaint that alleges the plaintiff's shareholder status and the efforts to obtain the desired action from the association, and barring the suit if the plaintiff does not adequately represent the other shareholders.
Full Text of Rule 4:32-3
Amendment History
New Jersey publishes each rule’s amendment record in a “History” note beneath the rule. It is reproduced verbatim below; the “R.R.” citations refer to the former Revised Rules numbering the current rules replaced.
Source-R.R. 4:36-2; adopted as R. 4:32-5 effective September 8, 1969; amended July 13, 1994 to be effective September 1, 1994; redesignated as R. 4:32-3 and; amended July 27, 2006 to be effective September 1, 2006.
Plain-English Summary
A derivative action lets shareholders enforce a right the association itself refuses to pursue, and this rule sets its pleading requirements. The complaint must be verified and allege that the plaintiff was a shareholder at the time of the transaction complained of (or acquired the shares by operation of law), and must set out with particularity the efforts to obtain the desired action from the directors or shareholders and why those efforts failed or were not made.
The plaintiff must also be a suitable champion. On filing, the plaintiff gives notice to other shareholders as the court directs, and the action may not be maintained if the plaintiff does not adequately represent the interests of the other shareholders. The class-action settlement rule applies to derivative actions as well.
Frequently Asked Questions
What must a shareholder derivative complaint allege?
It must be verified and allege the plaintiff’s shareholder status at the time of the transaction, and set out with particularity the efforts to get the association’s directors or shareholders to act and why those efforts failed or were not made.
Source & verification. The rule text and amendment history are reproduced verbatim from the
official New Jersey Rules of Court (N.J. Ct. R. 4:32-3). Prescribed by the Supreme Court of New Jersey (N.J. Const. art. VI, § 2, ¶ 3). The plain-English summary is original and written by us. Last verified July 7, 2026. ·
Official source
Also known as: derivative actionshareholder derivative actionverified complaintdemand requirement