Board of Directors Fiduciary Duty

News & Analysis as of

U.S. Court for District of Minnesota Dismisses Target Data Breach Shareholder Derivative Suits

On July 7, 2016, the United States District Court for the District of Minnesota granted Target’s unopposed motion to dismiss the derivative actions filed by a number of shareholders against the company relating to the...more

Court Of Chancery Dismisses Previously Dismissed Case

What happens when a derivative claim is filed outside of Delaware and then is dismissed by that other court? Well even if the other complaint might have stood up in Delaware, the subsequently filed Delaware case will also be...more

Court Of Chancery Applies Business Judgment Rule After Majority Tender Shares

In what might be one of the most important decisions this year, the Court held that the tender of their shares by a majority of the stockholders invokes an “irrebuttable” presumption that the business judgment rule applies...more

Tenth Circuit Upholds Nevada Law By Denying Stockholders Standing to Bring Claims on Behalf of Nevada Corporation

In In re Zagg Inc. Shareholder Derivative Action, No. 15-4001, 2016 U.S. App. LEXIS 11095 (10th Cir. June 20, 2016), the United States Court of Appeals for the Tenth Circuit held that stockholders of a Utah-based, Nevada...more

Are A Breach Of Fiduciary Duty And A Breach Of Governing Documents “Non Bis In Idem”?

Last week, I discussed the Court of Appeal’s consideration of whether the business judgment rule protects a director from claims based on breach of the corporation’s governing documents. See Does The Business Judgment Rule...more

Delaware Chancery Court Rejects MBO Merger Price as Best Evidence of Fair Value in Appraisal Proceeding

In In re Appraisal of Dell Inc., No. 9322 VCL, 2016 Del. Ch. LEXIS 81 (Del. Ch. May 31, 2016) (Laster, V.C.), the Delaware Court of Chancery determined that the fair value of the common stock of Dell Inc. (“Dell” or the...more

Blog: DE Court Comments on Block-Holder Rights in OptimisCorp

The Delaware Supreme Court issued an Order this week in OptimisCorp v. Waite that could have implications for VC-backed or other companies with so-called “block-holder” directors – or directors who are appointed by a...more

Blog: Options to Acquire: How these Creative Acquisition Strategies Differ from a Traditional Purchase

Creative acquisition strategies are offering both buyers and targets additional opportunities to grow their businesses through M&A. One strategy that we are seeing parties use is the “option to acquire” structure, which...more

Court of Chancery Explains Bad Faith Test

This decision deals with when the actions of directors may be considered to be in bad faith, at least when there is no self-interest involved and the directors are properly informed before taking the time to decide what to...more

Laurie & Monica Out-Action Jack…and Other Fiduciary Duties (Silicon Valley – Episode 22)

Episode 22 provides a decisive and satisfying showdown between Jack’s Box plan and Richard’s consumer platform option. Richard’s not-so-secret skunkworks project is dead, and the team sets to work on the Box believing that...more

Insights: The Delaware Edition - May 2016

This issue focuses on important, developing areas of Delaware corporation law and deal litigation, including the Court of Chancery’s clarification of its evolving views about disclosure-based deal litigation settlements;...more

Cybersecurity, Boards and Cyber-Board “Experts”: Caution Should Rule

A continuing frequent question from public companies is how a board should be constituted to oversee cybersecurity. Many public companies foist this additional burden on the audit committee. Those large enough to have a...more

"Delaware Supreme Court Provides Guidance on Aiding-and-Abetting Liability for Financial Advisors"

On November 30, 2015, the Delaware Supreme Court issued a much-anticipated opinion in RBC Capital Markets, LLC v. Jervis, No. 140, 2015, 129 A.3d 816 (Del. 2015). The Supreme Court unanimously affirmed the Court of Chancery’s...more

Delaware Supreme Court Confirms Business Judgment Standard For Fully Informed, Uncoerced Stockholder Vote

On May 6, 2016, in Singh v. Attenborough, No. 645, the Delaware Supreme Court strengthened the defenses available to directors by clarifying a roadmap for effectively dismissing post-closing claims for breach of fiduciary...more

Cybersecurity, Boards and Cyber-Board "Experts": Caution Should Rule

A continuing frequent question from public companies is how a board should be constituted to oversee cybersecurity. Many public companies foist this additional burden on the audit committee. Those large enough to have a...more

Bankruptcy Court Opinion Clarifies California Law on Duties of Directors & Officers Upon Insolvency

It is not unusual in the lifecycle of a start-up for the company to hit road blocks and have cash flow issues. During these times, the board and its members will ask the company’s professionals what their fiduciary duties are...more

Top Courts in Delaware and New York Affirm Business Judgment Rule Protection Where Procedural Safeguards are Followed

In recent decisions, both the Delaware Supreme Court and the New York Court of Appeals affirmed defendant-friendly lower court rulings, holding that, if appropriate procedural safeguards are employed in M&A transactions,...more

Director Duties: 2016 Amendments to the Maryland General Corporation Law and Maryland REIT Law

On April 26, 2016, Governor Hogan signed House Bill 354 (chapter 171), which amends the Maryland General Corporation Law (the “MGCL”) to clarify that a director of a Maryland corporation only has an obligation to comply with...more

Court Of Chancery Denies Second Chance To New Derivative Plaintiff

This decision illustrates the importance of putting your best foot forward in derivative litigation. Here, a different plaintiff had his complaint dismissed for failure to satisfy the demand excused rules. When this plaintiff...more

Delaware Law Updates - Demand Refused Rule 23.1 Explained by the Delaware Court of Chancery

In a recent decision out of the Delaware Court of Chancery – Friedman v. Maffei et al., C.A. No. 111105-VCMR – the court’s second-newest member, Vice Chancellor Montgomery-Reeves, dismissed a proposed derivative complaint on...more

Court of Chancery Eyes Duties in Deals Involving Stockholder

To determine the applicable standard of review in a stockholder challenge to a corporate transaction, a plaintiff may rebut the business judgment rule by pleading facts that support a reasonable inference that "a controlling...more

Blog: How to Handle Changes on Your Board of Directors

Board members tend to stay with companies for a relatively long time, but, like employees, sometimes it makes sense for a board member to leave. Here is what I try to do when a board member departs: - Clear...more

Delaware Supreme Court Expands Personal Jurisdiction Over Directors and Officers

Contrary to notions held by Delaware practitioners for decades, the Delaware Supreme Court held in Hazout v. Tsang, No. 353, 2015 (Del. Feb. 26, 2016), that a non-resident officer of a Delaware corporation is subject to...more

Blog: Nasdaq Proposes “Golden Leash” Disclosure, But Will It Prohibit The Practice?

At the end of January, Nasdaq filed with the SEC a rule proposal related to third-party compensation of directors in connection with their candidacy for and/or service on company boards, often referred to as “golden leash”...more

RBC Capital Markets, LLC v. Jervis, No. 140, 2015 (Del. Nov. 30, 2015) (Valihura, J.)

In this en banc decision, the Delaware Supreme Court affirmed the principal legal holdings and final judgment of the Court of Chancery finding, among other things, that RBC Capital Markets, LLC (“RBC”) aided and abetted...more

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