News & Analysis as of

In re Novell, Inc. S’holder Litig., C.A. No. 6032 (Del. Ch. Nov. 25, 2014) (Noble, V.C.)

In this memorandum opinion, the Court of Chancery granted summary judgment in favor of defendants on claims alleging that directors acted in bad faith by favoring a bidder in a sale process for reasons other than the pursuit...more

Delaware Court Provides Guidance on Acceptable Deal Protection Mechanisms and Scope of Third Party Aiding and Abetting Liability...

On November 25, 2014, the Delaware Court of Chancery issued a decision in In Re Comverge, Inc. Shareholders Litigation, which: (1) dismissed claims that the Comverge board of directors conducted a flawed sales process and...more

Waivers of IPO Lock-up

We have previously commented on the lock-up requirement in connection with IPOs and noted that it has become somewhat more frequent for underwriters to release issuers and/or their shareholders (including directors and...more

Courts Differ on Enforceability of Unilaterally Adopted Forum Selection Bylaws

While forum selection bylaws have become increasingly popular with US public companies, courts in Delaware and Oregon recently came to opposite conclusions on whether such bylaws, when unilaterally adopted by a board of...more

Delaware Supreme Court Rules That Privileged Documents Must Be Produced To Shareholders Investigating Corporate Misconduct

The Delaware Supreme Court recently held that, in certain circumstances, shareholders may be able to obtain access to privileged, internal documents in order to investigate potential breaches of fiduciary duty. In Wal-Mart...more

Delaware Court of Chancery Upholds North Carolina Forum Selection Bylaw for Delaware Corporation

Yesterday, in City of Providence v. First Citizens BancShares, Inc., Chancellor Andre Bouchard of the Delaware Court of Chancery held in a case of first impression that the board of a Delaware corporation may validly adopt a...more

When Winding Up A Corporation Don't Do This

I don't know any lawyers who specialize in winding up corporations, but if any of you are out there, you should read this post. It is important to remember, when winding up a corporation, that "principals and directors...more

Director Liability for Cybersecurity Risks

If a corporation is the target of a cyberattack resulting in a data breach, its board may be the target of a shareholder derivative action claiming breach of fiduciary duty. A recent example is Palkon v. Holmes, No....more

Texas Supreme Court's Recent Shareholder Oppression Opinions Reaffirm Primacy of Common Law Fiduciary Duties Under Gearhart

In three recent cases, the Texas Supreme Court has made it clear that for claims of "minority shareholder oppression" — essentially, acts of a majority shareholder group that are harmful to a minority shareholder without...more

Doing Business in Canada: Directors' Liabilities

DIRECTORS’ LIABILITIES - In Canada, there is a legal duty for every director and officer of a corporation to act honestly and in good faith with a view to the best interests of the corporation when exercising his/her...more

Delaware Court Dismisses Shareholder Class Action Suit Attacking Corporate Merger

Almost every proposed corporate merger is met with a shareholder suit against the acquiring company, merger target and the target’s board of directors in which the shareholders assert that the board breached its fiduciary...more

The Ropes Recap: Mergers & Acquisition Law News - Second Quarter 2014

In this issue: -Delaware Legislative Update -Delaware Supreme Court Upholds Facial Validity of Fee-Shifting Provisions in Bylaws of Delaware Non-Stock Corporation -News from the Courts: -Court...more

Chancery Court Provides Additional Room for Shareholders Challenging Change of Control Transactions

What you need to know: In its recent decision in Chen v. Howard-Anderson, Delaware’s Court of Chancery held that directors and officers may be found to have acted in bad faith, thereby breaching their fiduciary duty of...more

Recent Practical Effects of “Just Saying No”

In the past few months, we have seen an increasing number of hostile or unsolicited M&A bids where boards of directors of target companies have resisted bidders’ advances. Traditionally, the board-friendly Delaware approach,...more

Cambridge Ret. Sys. v. Bosnjak, C.A. No. 9178-CB (Del. Ch. June 26, 2014) (Bouchard, C.)

In this memorandum opinion, the Court of Chancery granted in part and denied in part the defendants’ motion to dismiss for failure to make a pre-suit demand on the board and for failure to state a claim, holding that demand...more

Exclusive Forum Provisions: A New Item for Corporate Governance and M&A Checklists

Public companies increasingly are adopting “exclusive forum” bylaws and charter provisions that require their stockholders to go to specified courts if they want to make fiduciary duty or other intra-corporate claims against...more

Bishop Gassis v. Corkery, C.A. No. 8868-VCG (Del. Ch. May 28, 2014) (Glasscock, V.C.)

In this post-trial decision in a proceeding pursuant to 8 Del. C. § 225, the Court of Chancery held that the board of the Sudan Relief Fund, Inc. (the “Fund”), a charitable corporation, validly removed the plaintiff as a...more

Representing the Targeted Executive: Diplomacy Matters

It seemed like a good idea. Provide a local media outlet with a peek under the company's hood—give a tour of the facilities, answer questions about operations, preview a few promising transactions. When the article ran,...more

The Palm II Court Decision Cracks Down On Condominium Boards

On March 21, 2014, the Illinois Appellate Court entered a Rule 23 Order in Palm vs. 2800 Lake Shore Drive Condominium Association ("Palm II"). A Rule 23 Order may not be cited as precedent in other cases in Illinois courts,...more

Paradigm Shift? The Delaware Supreme Court Allows Bylaw That Shifts Attorneys’ Fees to Loser in Fiduciary Duty Litigation

Under the prevailing “American rule,” shareholders and their counsel face little financial risk when they assert claims against directors and officers for breaches of fiduciary duty, typically following the announcement of a...more

Delaware Court of Chancery Underscores Heightened Pleading Standard Necessary to Support a Claim for Breach of Fiduciary Duty In...

In Houseman v. Sagerman, C.A. No. 8898-VCG, 2014 WL 1478511 (Del. Ch. Apr. 16, 2014), the Delaware Court of Chancery (Glasscock, V.C.) granted, in part, a motion to dismiss filed by certain directors and the financial advisor...more

Risk Management Committees–An Idea Whose Time Has Come

Earlier this year I wrote that directors have become much more educated in recent years about enterprise (not just financial) risk management and about their fiduciary responsibility to oversee ERM effectiveness. (See this...more

Chen v. Howard-Anderson: A Study in the Standards of Review and of D&O Conduct in the Merger Context

Litigation over challenges to corporate mergers has swelled in recent years, exposing directors, officers and their D&O insurers to large amounts of defense costs and potentially great liability. The Delaware Chancery Court...more

M&A Update: Delaware Court Upholds Sotheby’s Poison Pill Defense Against Activist Citing “Negative Control” As A Corporate Threat

In a May 2, 2014 ruling relating to activist hedge fund Third Point LLC’s proxy battle with auction house Sotheby’s, the Delaware Chancery Court found that Third Point was not likely to succeed in its argument that the...more

M&A Update: Chancery Court Provides Another Lesson For A Reasonable Sale Process

In a recent decision, Chen v. Howard-Anderson, the Delaware Chancery Court once again questioned the reasonableness of how a board conducted the sale of a company when it permitted stockholder claims to go to trial....more

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