What is the effect of section 834 of the Corporations Code on a derivative shareholder's action?

Taking the extensive record by its four corners, it is clear that the decision of the respondent court was based on its belief that section 834 of the Corporations Code was never intended to be applicable to a derivative shareholder's action in which the plaintiff is the holder of more than 5 per cent of the shares of the corporation. To put it otherwise, the argument is that section 834 should be interpreted as applying [264 Cal.App.2d 960] only to 'strike' suits and that it was not intended to apply to actions by bona fide shareholders holding a very substantial interest in the corporation. This argument was advanced and squarely rejected in Wood v. Gordon, 112 Cal.App.2d 374, pp. 377--378, 246 P.2d 84, p. 86 where the court said: 'The argument that the statute was intended and should be limited to strike suits is unavailing in view of its language. The test laid down by the statute as to one who has participated in some act complained of does not turn on whether the suit is or is not a 'strike' suit but whether there is a reasonable probability that its prosecution against the moving party will or will not prove of ultimate benefit to the corporation or its security holders. The statute does not distinguish between so-called strike suits and those that are generally

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