## Facts

- Limited partners in a Delaware limited partnership hedge fund asserted derivative claims on behalf of the fund against the fund, its general partner, and affiliated controllers.
- Plaintiffs alleged wrongdoing in the fund’s management and sought to litigate entity-level claims derivatively.
- Defendants moved to dismiss, arguing plaintiffs lacked statutory standing to sue derivatively and failed to satisfy statutory and rule-based preconditions for derivative litigation, including demand.
- Some plaintiffs were not partners (or assignees) both when the challenged conduct occurred and when the action was filed.
- Plaintiffs did not make a pre-suit demand on the general partner and attempted to proceed on a demand-futility theory.

## Issues

1. Whether Delaware limited partnership derivative plaintiffs must be partners (or assignees) at both the time of the challenged transaction(s) and at the time the action is filed.
2. Whether plaintiffs satisfied the statutory demand requirement for limited partnership derivative suits or pleaded particularized facts excusing demand as futile.
3. Whether and how Delaware corporate-law derivative doctrines (standing and demand futility) inform interpretation of parallel limited partnership derivative provisions.

## Decision

- The court dismissed the derivative claims.
- The court held that Delaware’s limited partnership derivative statute imposes a continuous-ownership requirement: a derivative plaintiff must be a partner (or assignee) when the complained-of transaction occurred and when suit is commenced.
- Because plaintiffs did not meet that requirement as to the challenged conduct, they lacked standing to maintain derivative claims on the fund’s behalf.
- The court separately held that plaintiffs failed to satisfy the demand requirement and did not plead demand futility with the required particularity.

## Legal Principles

- A limited partnership derivative action is conditioned on statutory standing; the plaintiff must be a partner or assignee at the time of the challenged transaction and at the time the action is brought.
- Continuous ownership in the limited partnership context functions as a mandatory precondition to derivative standing, not an equitable, case-by-case dispensation.
- Demand is a pre-suit prerequisite in limited partnership derivative litigation unless demand is excused; demand futility must be pleaded with particularized facts showing the decision-maker cannot exercise disinterested, independent judgment on pursuing the claim.
- Delaware courts may use corporate derivative doctrine as persuasive guidance when construing parallel derivative-suit requirements for alternative entities, reflecting policies against trafficking in lawsuits and misalignment between the nominal plaintiff and the entity.

## Conclusion

The Court of Chancery enforced statutory gatekeeping rules for derivative suits on behalf of Delaware limited partnerships by requiring continuous ownership for standing and insisting on demand (or well-pleaded demand futility), leading to dismissal of the fund investors’ derivative claims.


Anglo American Security Fund, L.P. v. S.R. Global Int'l Fund, L.P., 829 A.2d 143 (Del. Ch. 2003)