7-13.1-905. Special litigation committee.
(a) If a limited partnership is named as or made a party in a derivative proceeding, the
partnership may appoint a special litigation committee to investigate the claims asserted
in the proceeding and determine whether pursuing the action is in the best interests
of the partnership. If the partnership appoints a special litigation committee, on
motion by the committee made in the name of the partnership, except for good cause
shown, the court shall stay discovery for the time reasonably necessary to permit
the committee to make its investigation. This subsection does not prevent the court
from:
(1) Enforcing a person’s right to information under § 7-13.1-304 or 7-13.1-407; or
(2) Granting extraordinary relief in the form of a temporary restraining order or preliminary
injunction.
(b) A special litigation committee must be composed of one or more disinterested and independent
individuals, who may be partners.
(c) A special litigation committee may be appointed:
(1) By a majority of the general partners not named as parties in the proceeding; or
(2) If all general partners are named as parties in the proceeding, by a majority of the
general partners named as defendants.
(d) After appropriate investigation, a special litigation committee may determine that
it is in the best interests of the limited partnership that the proceeding:
(1) Continue under the control of the plaintiff;
(2) Continue under the control of the committee;
(3) Be settled on terms approved by the committee; or
(4) Be dismissed.
(e) After making a determination under subsection (d) of this section, a special litigation
committee shall file with the court a statement of its determination and its report
supporting its determination and shall serve each party with a copy of the determination
and report. The court shall determine whether the members of the committee were disinterested
and independent and whether the committee conducted its investigation and made its
recommendation in good faith, independently, and with reasonable care, with the committee
having the burden of proof. If the court finds that the members of the committee were
disinterested and independent and that the committee acted in good faith, independently,
and with reasonable care, the court shall enforce the determination of the committee.
Otherwise, the court shall dissolve the stay of discovery entered under subsection
(a) of this section and allow the action to continue under the control of the plaintiff.
P.L. 2022, ch. 121, § 2, effective January 1, 2023; P.L. 2022, ch. 122, § 2, effective
January 1, 2023.
