News & Analysis as of

Business Litigation Board of Directors

Patton Sullivan Brodehl LLP

LLC Members May Ratify Prior Defective Actions

Actions taken within business entities are sometimes deemed invalid due to procedural defects.  For corporations, section 119 of the Corporations Code establishes a clear procedure by which defective actions can be ratified...more

Conyers

Directors’ Duties – Two Stage Test for the Creditor Duty

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We have published a series of articles dealing with directors’ duties in the zone of insolvency. In previous briefings, we have written about the high-profile UK Supreme Court ruling in Sequana and the New Zealand Supreme...more

A&O Shearman

Delaware Supreme Court Holds MFW Is Applicable To Controlling Stockholder Transactions Even Outside Of Freeze-Out Context

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On April 4, 2024, in an opinion authored by Chief Justice Collins J. Seitz, Jr., the Supreme Court of Delaware sitting en banc held that the framework articulated in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014)...more

Mayer Brown

A Matter Of Propriety: Delaware Courts Reject Books-and-Records Demand Driven by Ulterior Motive

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Section 220 demands are a commonly used tool for stockholders to gain access to a company’s books and records. Although this provision of the Delaware General Corporation Law vests stockholders with a right of access thereto,...more

Sheppard Mullin Richter & Hampton LLP

The Delaware Court of Chancery Puts Practitioners on Notice Regarding Voting Formalities Around Merger Agreements

In Ap-Fonden v. Activision Blizzard, Inc., C.A. No. 2022-1001-KSJM, 2024 WL 863290 (Del. Ch. Feb. 29, 2024), the Delaware Court of Chancery (McCormick, C.) declined to dismiss a claim alleging that the Board of Directors of...more

Dechert LLP

Delaware Court of Chancery’s Rescission of Elon Musk’s US$55.8 Billion Pay Package Signals Expansion of Scrutiny into Potential...

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The Delaware Court of Chancery issued a post-trial opinion, on January 30, 2024, in Tornetta v. Musk, holding that Tesla’s board of directors (the “Board”) breached its fiduciary duties in awarding CEO Elon Musk (with the...more

Farrell Fritz, P.C.

The Flexible “For Cause” Standard for Director and Officer Removal

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Sections 706 (d) and 716 (c) of the Business Corporation Law (the “BCL”) both contain a “for cause” standard for judicial removal of corporate directors and officers. Complaints with claims for judicial corporate director and...more

Troutman Pepper

Delaware Court of Chancery Clarifies Fiduciary Limitations on Controlling Stockholder's Exercise of Voting Power

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In a landmark decision, the Delaware Court of Chancery addressed, for the first time, the precise duties that a controlling stockholder owes, and the standard of review that will apply, when a controlling stockholder takes...more

Troutman Pepper

Delaware Court of Chancery Confirms Enforceability of Identity-Based Voting Stock

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Recently, in Colon v. Bumble, the Delaware Court of Chancery held that certain provisions in the charter of Bumble, Inc. (Bumble), which contemplated that each share of stock carried either one vote or 10 votes depending upon...more

Sheppard Mullin Richter & Hampton LLP

The Delaware Court of Chancery Confirms that Duty of Oversight Claims Against Corporate Officers Are Subject to the Same High...

In Segway Inc. v. Hong Cai, 2023 Del. Ch. LEXIS 643 (Del. Ch. Dec. 14, 2023), the Delaware Court of Chancery (Will, V.C.) dismissed a claim for breach of fiduciary duty brought by Segway Inc. (the “Company”) against its...more

Conyers

A Clever Shortcut? Thoughts on the China Properties Group Case

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In the case of Re China Properties Group Limited (in Liquidation) [2023] HKCFI 2346, the Hong Kong Court has shown its commitment to providing assistance to local liquidators appointed by it by asserting in personam...more

DarrowEverett LLP

Diversity Driven Derivative Suits: Culture Wars Come to the Boardroom

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Traditionally deployed to protect a corporation from its board’s imprudent investment or financial decision-making, in recent years shareholders have taken to bringing derivative actions on a corporation’s behalf for its...more

Sheppard Mullin Richter & Hampton LLP

Delaware Court of Chancery Clarifies Heightened Standard for Recovery of Attorneys’ Fees in Disclosure-Based Deal Litigation

In Anderson v. Magellan Health, Inc., No. 2021-0202, — A.3d —-, 2023 WL 4364524 (Del. Ch. July 6, 2023) (McCormick, C.), the Delaware Court of Chancery addressed the circumstances under which the Court will award a...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Denies Car Dealership Owner’s Motion to Dismiss Suit Brought by Dealership’s Operating Companies, Puts...

Judge Richard Platkin of Albany County recently handed down a stark reminder to Defendant Walid Darwish: everyone has to follow the rules of the road, even the person who writes the rules and owns all the cars. On April 26,...more

Snell & Wilmer

Board Diversity Initiatives Falter in the Courts but Investor Interest Is Likely to Remain Strong

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Last year, Superior Courts in Los Angeles County invalidated two California statutes requiring specific diversity mandates for California public company boards (Senate Bill 826 “SB 826” and Assembly Bill 979 “AB 979”). The...more

Skadden, Arps, Slate, Meagher & Flom LLP

Post-Trial Oracle Ruling Provides a Roadmap for Navigating Transactions With an Influential Fiduciary on Both Sides of the Deal

The mere potential for a prominent, highly respected officer, director and minority holder to influence a board’s decision to approve a deal where the minority holder sits on both sides is insufficient to confer controller...more

Troutman Pepper

Preserving the Corporate Attorney-Client Privilege as Against Investors

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In Hyde Park Venture Partners Fund III, L.P. v. FairXchange, LLC, the Delaware Court of Chancery provided a valuable reminder to corporations and their directors and officers that a corporation cannot assert a privilege, such...more

Farrell Fritz, P.C.

First Department Recognizes Cause of Action for Specific Performance of LLC Member Voting Agreement

Farrell Fritz, P.C. on

In 1941, two of the three shareholders of Ringling Bros.-Barnum & Bailey Combined Shows, Inc. entered into an agreement stating that they would vote their combined 630 of the outstanding 1000 shares of Ringling Bros. stock...more

Robson & Robson, P.C.

Can Closely Held Companies Investigate Shareholder Complaints Without Breaking The Bank?

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Last month, we tackled Pennsylvania’s “universal” demand requirement. As a refresher, unlike many states, Pennsylvania will not excuse the shareholder of a company who wants the company to sue its executives or directors from...more

Farrell Fritz, P.C.

Top 10 Business Divorce Cases of 2022

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I’m delighted to present our 15th annual list of the past year’s ten most significant business divorce cases. This year’s list includes decisions by New York’s trial and appellate courts concerning a smorgasbord of...more

Conyers

Cayman schemes – where are we now?

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Following the implementation of the recent amendments to the Companies Act to remove the head count test for shareholder schemes of arrangement, Conyers has assisted two Hong Kong listed companies (China Vast Industrial Urban...more

Conyers

BVI Directors’ Duties And Insolvency: The Impact of the Sequana Case

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On 5 October 2022 the UK Supreme Court (UKSC) handed down its “momentous” decision in BTI 2014 LLC v Sequana SA and others1. The case addresses issues of ‘‘considerable practical importance to the management of companies’’,...more

Conyers

Cayman Islands Restructuring: Recent Common Law Insights for Directors when Entering the Zone of Insolvency

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Conyers partner Jonathon Milne and associate Rowana-Kay Campbell in the Cayman Islands, and partner Anna Lin in Hong Kong, explain why the new Cayman restructuring regime is likely to be a welcome addition to the legislative...more

Sheppard Mullin Richter & Hampton LLP

Los Angeles Superior Court Invalidates California Law Requiring Gender Diversity on Company Boards

In Crest v. Padilla, No. 19STCV27561, 2022 WL 1565613 (Cal. Super. May 13, 2022), the Superior Court of California for the County of Los Angeles (Duffy-Lewis, J.) issued a decision following a bench trial finding that Senate...more

Schwabe, Williamson & Wyatt PC

Borer Decision and Potential Impacts to ANCs

On April 1, 2022, the Alaska Supreme Court issued Borer v. The Eyak Corporation, which may impact Alaska Native Corporation boards of directors and their corporate governance structures and policies. Courts only resolve...more

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